Buy KNR Constructions; target of Rs 385: Edelweiss

Edelweiss' research report on KNR Constructions

KNR Constructions (KNR) posted robust Q4FY18 performance with revenue jumping 30% YoY and EBITDA margin rising ~440bps YoY to 19.3% due to revision of cost estimates with certain projects nearing completion; this, along with Sec 80 (IA) tax benefits, led to PAT surging 52% YoY. Over past quarter, KNR has won five HAM projects with EPC cost of ~INR39.8bn; this has boosted order book to ~INR63bn (3.3x TTM revenue), improving revenue visibility.

Outlook

We remain sanguine about KNR’s prospects on robust bid pipeline and its strong execution capabilities. Maintain ‘BUY’ with SoTP-based target price of INR385.

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