HDFC Securities is bullish on KNR Constructions has recommended buy rating on the stock with a target price of Rs 364 in its research report dated May 31, 2018.
HDFC Securities's research report on KNR Constructions
KNRC continues to outperform its growth guidance and delivered strong 4QFY18 revenue at Rs 6.2bn which was 25.9% above estimates. Revenue for FY18 came in at Rs 19.3bn (+25.3% YoY). EBITDA margin for FY18 was 20.0% on account of cost reversals in several near completion projects. We estimate sustainable margins to be around 15-16% after considering contribution from HAM projects. Order book is now at Rs 63.0bn including Rs 39.8bn EPC works of the 5 HAM projects it won in 4QFY18. KNRC is now focusing on completing financial closure. It has guided for ~25.0bn for inflows in FY19. Bidding will only be on the EPC front as KNR takes a breather from further HAM tenders. KNRC has delivered industry beating return ratios in the past.
We believe it is set on a steady growth path with strong growth visibility, minimal leverage, lean WC cycle, a prudent bidding strategy and a good corporate governance track record. We continue to maintain BUY with SOTP of Rs 364/sh.
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