KNR Constructions Ltd. share price target

KNR constructions (KNR), reported a decent topline growth and stellar operating margins. On a standalone basis revenue grew by 24% YoY to INR 558 cr which was below expected 30% YoY growth.

Enters into SPA with Cube for Walayar BOT project KNR has entered into a share purchase agreement (SPA) with Cube Highways to sell its 100% entire equity stake in KNR Walayar Tollways BOT toll asset. The EV of this deal is | 529.3 crore excluding claims receivables (worth | 170 crore) from NHAI & other government instrumentalities, which would be passed to KNR Constructions as and when realized. As of Q2FY20, KNR Walayar SPV had total | 143.1 crore debt, implying equity value of | 386.2 crore. KNR had infused total | 397.4 crore in this toll project, which...

10 January 2020 KNR has entered into a share purchase agreement with Cube Highways to sell its 100% stake in the Walayar road project. Total enterprise value of the deal stands at INR5.3b. As of Sep19, debt on the project was at INR1.4b. Thus, the equity value of the deal is estimated at ~INR3.9b or P/Inv of ~1x. This is in line with our valuation of the project. There are further NHAI claims and other governmental instrumentalities, which are a pass through to KNR as and when realized. Taking this into account, the deal value may surpass our valuation of the project. The transaction is likely to close in another 2-3 months. We factor in proceeds of INR3.9b by end-Mar20. KNR has already monetized three of its HAM projects. We expect the balance sheet to strengthen further with net cash position of >INR2b/5b by FY21/22.

KNR Constructions Ltd (KNR) is a leading EPC player largely focusing on national and state highway projects. KNR has successfully executed ~6,000 lane km road projects across 12 states in India....

KNR Constructions (KNR), reported a stellar set of numbers well making up for poor performance in last quarter.

KNR Constructions (KNRC) Continued to report a strong operating performance in 2QFY20 with margin exceeding our estimate with the wide range yet again. Revenue grew by 31% YoY and 17% QoQ to Rs5.5bn (including Rs180mn claims received/booked in revenue) vs. our estimate of Rs5.1bn mainly led by pick-up in execution in HAM projects. Adjusted for claim booked, EBITDA margin stood at strong 19.7% way ahead of ours and even the Company's own guidance. APAT declined by 7% YoY to Rs420mn (but higher than our estimate of Rs395mn) mainly led by higher tax, as new projects do not enjoy any tax benefit. Order book as on 30th Sept'19 stood at Rs51.5bn (excluding Rs15.4bn EPC order components from 2 AD pending HAM...

Orderbook at | 6,681.8 crore as of Q2FY20 KNR's order book (OB) was at a strong | 6,681.8 crore (including the recently won HAM project and Karnataka State Highways Improvement Project (KSHIP) HAM project), implying order book-to-bill ratio of 3.1x (on TTM basis). The OB consists of | 4,830.6 crore from roads division and | 1,850.4 crore from irrigation. On the new orders front, it secured order inflows (OI) worth | 1,800 crore (comprising | 1,700 crore irrigation projects and | 100 crore from change in scope at certain projects). KNR is targeting incremental...

KNR Constructions' (KNRC) Q2FY20 core revenue ex-arbitral awards grew 26% YoY and core EBITDA margin beat estimates at 20.6% (+60bps YoY).

KNR delivered yet again another robust quarterly performance. Kerala/Muzaffarpur BOT collection per day stood at Rs 1.8/2.2mn vs. Rs 1.9/2.7mn QoQ. KNR is in advance stage of selling Kerala BOT. For 3 HAM projects Rs 1.7bn investment, KNR expects to receive Rs 3.3bn over the next 4yrs. Strong balance sheet, periodic BOT/HAM equity churn and robust execution capability reinforces our positive stance on KNR. We maintain BUY. Key risks (1) Slowdown in government ordering (2) Higher crude and cement prices (3) Increase in interest rates and (4) Further liquidity tightening in the financial sector. We maintain BUY on KNR with SOTP-based TP of Rs 378/sh (valuing core EPC business 18x FY21EPS at Rs 319/sh, Subsidiaries Rs 60/sh). KNR delivered yet another robust quarter with Revenue/EBIDTA/APAT beat of 10/20/35% respectively.

KNR's order book (OB) was at a strong | 6,518.8 crore (including the recently won HAM project and Karnataka State Highways Improvement Project (KSHIP) HAM project), implying order book-to-bill ratio of 3.2x (on TTM basis). The OB consists of | 5,544.6 crore from roads division and | 972.8 crore from irrigation. On new orders front, it won Mallanna Sagar irrigation project worth | 850 crore in September, 2019. KNR is targeting another HAM order worth | 1,000-1,500 crore in FY20E. With this, we expect revenues to grow at 19% CAGR to | 3,031.1 crore in FY19-21E....