12 June 2020 Though 4QFY20 revenues were lower than expectation, KNR Construction (KNR) outperformed on operating margins yet again. Higher interest outflow and depreciation owing to mobilization of HAM projects, coupled with (incl. The net cash balance sheet coupled with pending proceeds from monetization of road assets, provides key competitive advantage in bidding for newer projects. However, owing to the impact of COVID-19 related execution challenges in 1HFY21, we have cut our FY21E EPS by 25%, but raised FY22E EPS by 9%. We maintain our 4QFY20 revenue was down 6% YoY (17% below est.) to INR6.8b. EBITDA was flat YoY at INR1.5b (9% below est.); EBITDA margin came in at 21.7%, up 160bp YoY owing to higher contribution from high margin irrigation projects. Higher interest and depreciation cost coupled with lower other income led to 17% YoY decline in PBT to INR859m.