Buy KNR Constructions; target of Rs 320: Motilal Oswal

Motilal Oswal's research report on KNR Constructions

Revenue grew 16% YoY (42% QoQ) to ~INR11.8b (19% beat) in 4QFY23. While EBITDA stood at INR2.1b (16% beat), EBITDA margin declined 255bp YoY and 77bp QoQ to 18% (est. 18.6%). Driven by robust execution, APAT increased by 14% YoY to INR1.3b (20% beat). KNRC secured new orders worth ~INR20b in 4QFY23, taking its total order book to ~INR89b. The order pipeline is decent, with KNRC expecting INR40- 50b in new project wins in FY24. The robust tender pipeline in the Road sector is expected to generate order inflows worth INR40-50b in FY24, which should support growth in FY25 and beyond. Taking into account KNRC's existing order book value of INR89b, we expect an 11% CAGR in revenue over FY23-25. EBITDA margin is expected to be around 18-20%.

Outlook

Given this positive outlook, we reiterate our BUY rating with a TP of INR320 (SoTP-based valuation).

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