KNR Constructions Ltd. share price target

View: Spike in execution in H2FY20E, maintain Buy KNR's revenue is down 16.5% YoY to 4.6 bn in Q1FY20 (33.5% below estimates), due to delay in receiving appointed date for HAM projects coupled with 400-500 mn worth of execution not billed in Q1FY20. The EBITDA margin fell 37 bps YoY to 19.4% (287 bps above estimates), due to higher construction and employee cost which was partially offset by lower other expense. EBITDA margins are on the higher side led by lower sub contraction cost and various irrigation projects are on the verge of...

KNR constructions (KNR), reported its Q1FY20 numbers and surprised us negatively due to lower than expected topline growth.

We recently interacted with KNR Construction's (KNRC) management to seek more clarity on the awarding activity of roads and irrigation projects. Management believes the ordering activity, primarily from NHAI, should pick up from August 2019. KNRC is looking to monetize its Walayer BOT project (invested Rs4bn), which is selfsustaining and has an average toll collection of Rs8mn/day. In our view, successful...

We recently met the management of KNR Constructions' (KNR) to understand its current business status and opportunities ahead. KNR is a focused road based EPC player that enjoys a strong execution track record and healthy balance sheet (0.19x currently). Revenues, PAT have grown at 20.7%, 34.0% CAGR to | 2,137.3 crore, | 263.3 crore, respectively, in FY1419. Currently, its orderbook is at | 5,900.6 crore (including three recently won HAM projects), 2.8x FY19 revenues. KNR is negotiating opportunities on irrigation projects worth ~| 1,500 crore. Overall, it expects order inflow...

Global yields fell after disappointing manufacturing, durable goods and payroll data from US. Fed Chairman is also open to steering the rates depending on which direction economy takes. US equity markets welcomed lower yields. However, DXY index fell on prospects of lower yields. Indian yields too fell after RBI reduced policy rate by 25bps. INR was stable on the back of FII inflows. Global markets and central banks remain data dependent. So does RBI. In...

KNRC expects order inflow of INR25b in FY20, mainly supported by the Irrigation segment. The company mentioned that it is well positioned to finalize a few projects in the near term, including (a) two irrigation projects - Malanna Sagar and Palamurru irrigation projects - worth INR16b (INR8b each) and (b) one HAM project worth INR10b. A pick-up in order inflows in Roads, however, remains elusive.

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. Q4FY19 revenue grew by 15% YoY (above estimate) due pick up in road EPC & irrigation projects. EBITDA margin improved by 80bps YoY to 20.1% due to high margin from irrigation projects and reduction in sub-contracting expenses. Out of six HAM projects, KNR achieved Financial Closure for two HAM...

KNR constructions (KNR), one of best managed road constructor with light balance sheet, low working capital and one of the highest RoCE among peers, reported its Q4FY19 numbers.

KNR delivered strong 4Q/FY19 financial performance beating its own guidance of FY19 muted Revenue growth. Owing to delay in ADs, we have cut our FY20E Revenue/EBIDTA/APAT estimates by 8/8/14%. For FY21E we have cut Revenue estimate by 3.5%, but due to an increase in EBIDTA margin estimate and lower depreciation, our EPS has gone up by 9.6%. Kerala/Muzaffarpur BOT collection per day stood at Rs 1.8/2.4mn vs. Rs 1.6/2mn QOQ. We maintain BUY. Key risks (1) Slowdown in government ordering (2) Higher crude and cement prices (3) Increase in interest rates and (4) Tightening liquidity in the financial sector. We maintain BUY on KNR with an increased SOTP-based TP of Rs 363 (valuing core EPC business 18x FY21EPS at Rs 303/sh, Subsidiaries Rs 60/sh). KNR delivered strong Revenue/EBIDTA/APAT beat of 30/36/55%.

Robust Q4 beat HAM projects to spur growth KNR Constructions' (KNRC) Q4FY19 revenue growth remained robust at 15% YoY led by faster execution of a HAM project. EBITDA margins held strong at 20.1% on the back of high-margin irrigation projects. Order backlog expanded 2.6x QoQ to Rs 40.2bn (1.9x FY19 revenue) led by the award of appointed dates (AD). Gross toll collection at Muzaffarpur/Walayar BOT projects rose to Rs 2.4mn/Rs 1.8mn per day. We raise earnings estimates and...