KNR Q1FY16 net sales of Rs 1.7 bn came ~ 30% below our estimate. It declined 27.6% YoY as the 73.4% of order book (as on Q1FY16) has been won recently, where execution yet to pick-up. EBITDA margin improved by 122bps to 14.4% (64bps above our expectation), due to sharp contraction in sub-contracting expenses (which as a percentage of net sales fell to 9.2% vs 21.6% in Q1FY15). Net profit fell 24.2% YoY to Rs150 mn (in-line with our expectations), due to lower operating performance coupled with 12.1% tax rate compared to 27.1% tax reversal in Q1FY15.