Hold KNR Constructions; target of Rs 755: Geojit BNP Paribas

KNR Constructions Ltd (KNR) is a leading EPC player largely focusing on national and state highway projects. KNR has successfully executed 6,000 lane km road projects across 12 states in India.   Q1FY17 revenue grew by 77% (above our estimates), aided by stunning execution of orders. Better operating margins & tax refunds elevated the PAT by 87% YoY.  Healthy order book which is 4.8 times of trailing 12M revenue provides strong visibility to future revenue growth. We raised our FY17E revenue & earnings by 2% and 8% respectively led by ramp-up in execution. A strong balance sheet, efficient working capital management and low debt make KNR a favourable pick. We value standalone business at a PE of 13x FY18E EPS and BOT projects at 1xP/B to arrive at SOTP target price of Rs 755 with a Hold rating. 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.