KNR posted revenue in line however, EBITDA margins and PAT above estimates. KNR posted 10.1%/ -1.4%/ 19.5% YoY growth in revenue/ EBITDA/ Adj. PAT to Rs6.0 bn/ Rs1.2 bn/ Rs611 mn in Q2FY21. We maintain our revenue estimates and slightly increase our EBITDA margin estimates by 213/ 49 bps for FY21E/ FY22E factoring H1FY21 results. Accordingly, we increased our APAT estimates by 17.0%/ 2.4% for FY21E/ FY22E. We introduce FY23E. Labour availability currently stands at 80% (60% in Aug’20) which is expected to increase to 100% post festive season.
OutlookWe expect a 18.8%/ 19.0% revenue/ APAT CAGR over FY20-23E, with EBITDA margins of 19.6%/ 18.0%/ 18.0% for FY21E/ FY22E/ FY23E. Considering pick up in execution from Q3FY21E, healthy return ratios, a well-managed balance sheet, comfortable working capital, low D:E, and quality management, we maintain BUY with a SOTP-based TP to Rs387 (15x Sep’22E EPS and 1.2x PB for HAM investment).
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