KNR Constructions - Strong operating performance led by robust execution: CRISIL

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26 Aug, 2025 12:21

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CRISIL's research report on KNR Constructions

KNR Constructions Ltd’s (KNR’s) standalone Q4FY17 results surpassed CRISIL Research’s estimates. Standalone revenue increased 65% y-o-y to Rs 4.8 bn owing to robust order execution. This led to EBITDA growth of 69% y-o-y and EBITDA margin expansion of 40 bps y-o-y. Despite healthy operating performance, adjusted PAT declined 9% y-o-y owing to rise in depreciation and steep fall in other income. As of FY17, the order book remains strong at Rs 38bn (book-to-bill ratio of 2.5x on LTM revenue), which provides revenue visibility for the next two years. The company received orders worth Rs 16 bn in FY17. We expect the momentum in order flow to continue owing to 1) robust outlook on government spending on road and irrigation sectors over FY18-19. 2) KNR’s strong execution track record, which should help it capitalize on the industry opportunities and 3) increasing focus on the hybrid annuity model (HAM). We retain our fundamental grade of 4/5. However, order wins and execution are key monitorables.

We have raised our estimates for FY18-19. We retain the P/E multiple of 15x for the EPC business and P/B multiple of 1x for Kerala and Muzaffarpur BOT (toll) projects. Following the upward revision in earnings, we have raised the sum-of-the-parts (SoTP)-based fair value to Rs 226 per share from Rs 180. At the current market price, our valuation grade is 3/5.

Disclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL's opinions as on the date of this Report.  The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.

CRISIL Limited. All Rights Reserved. Published under permission from CRISIL"

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