KNR Constructions (KNRC) reported a strong 2QFY16 execution beat, with revenue/EBIDTA coming in 15.7/39.2% ahead of our estimates. Lower raw material costs resulted in EBIDTA margins expanding 23bps/369bps YoY/QoQ. The balance sheet is healthy with standalone net debt at Rs 400mn (Rs 190mn decrease QoQ) and net D/E at 0.06x (vs. 0.1x end-1QFY16).