Buy KNR Construction ; target of Rs 720: Emkay

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26 Aug, 2025 12:21

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Emkay research report on KNR ConstructionRevenue came in at Rs2.19 bn +2.3% YoY against our expectation of Rs1.9 bn on stable execution rate, adjusting for the Rs148 mn claim, revenue came at Rs2.04 bn -4.6% YoY still higher than our expectation of Rs1.9 bn EBITDA came in at Rs466 mn +55.1% YoY against our expectation of Rs267 mn on higher revenue flow and margins, adjusted EBITDA margin came at 15.6% +153 bps YoY against our expectation of 14.1%. The management guides for an EBITDA Margin of 13-14% for FY17E/18E Strong order book providing long visibility and coupled with proven execution capabilities and healthy operating margins will enable strong earnings growth going ahead. Maintain buy with a target price of Rs720/share, the stock trades at 14x/10x FY17E/18E EPS.Other highlightsThe company has seen pick up its newly won projects like Madurai –Ramanathpuram Project worth Rs8.95 bn , Chittagong City outer Ring Road worth Bangladesh Rs2.62 bn, Thiruvananthapuram Bypass from Kazhakkoottam (Thiruvananthapuram) to Mukkola Junction Rs6.69, but continues to face challenge in Chennai projects due to unseasonal rains (Upgrading Arcot Villupuram Road worth Rs3.2 bn ). The company has lost Rs1.2- 1.5 bn worth of revenue to be executed in FY17E because of delay in clearances and unseasonal rains across projects. The company is qualified for 6-7 projects in irrigation segment in Telangana. We have seen tenders worth Rs300 bn being floated in the irrigation by Telangana state. Current daily toll collection at Walayar – Vadakkancherry Project stands at Rs1.1 mn per day against projected bid at Rs1.7 mn per day. The company has invested equity worth Rs1.35 bn and has given loans and advances worth Rs1.10 bn to the project. Expects to infuse Rs500 mn over the next six months for the revenue shortfall in the project. Expects Muzaffarpur Barauni Tollway project to achieve provisional COD by March 2016. The company has appointed the contractor for the road project in Arunachal Pradesh which was in JV with JKM Infra. Expects to complete 60-65% of the road project by June 2016 100% completion by June 2017. For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions