Motilal Oswal's research report on KNR Constructions
KNR Constructions (KNRC)’s revenue was up 8% YoY/down 2% QoQ to ~INR8.3b (6% below our estimate) in 3QFY23. While EBITDA was at INR1.6b (in line), EBITDA margin contracted 190bp YoY/350bp QoQ to 18.8% (v/s our estimate of 18.5%) during the quarter. With respect to the search operation by the Income Tax Department, KNRC created a provision of INR240m towards income tax and INR95m towards interest on income tax, leading to a rise in interest cost during the quarter. KNRC reported an exceptional profit of INR1.4b during the quarter, relating to the divestments of the company’s 51% stake in KNR Tirumala Infra Pvt Ltd and KNR Shankarampat Projects Pvt Ltd, and 100% stake in KNR Srirangam Pvt Ltd to CUBE Highways and Infrastructure III Pte Ltd. The transaction was completed in Oct’22.
Outlook
We marginally cut our estimates for FY24 and maintain our BUY rating on the stock with a revised SoTP-based TP of INR305.
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