KNR Constructions Ltd. share price target

Q3FY22 revenue grew by 11.7% YoY which is below our estimate due to tepid execution of new projects. Despite higher commodity prices, EBITDA margin improved by 103bps YoY to 20.7% due to fall in employee & other expenses. Order book stood at Rs10,009cr (31% YoY) which is 3.2x TTM revenue and adds revenue visibility for two to three years. The company has already received an order inflow of Rs4,000cr...

Price escalation clause in roads agreement, and higher margins at irrigation projects likely to keep operating margin at an elevated level Key Risk: (i) Delay in HAM projects execution; (ii) Any working capital...

Prudent management, net debt free, robust return ratios (RoCE: >23%) Q2FY22 Results: KNR reported a healthy performance in Q2FY22. Standalone revenue improved 25.7% YoY to | 755.6 crore, largely backed...

Order inflow target at Rs20-25bn in H2FY22: H1FY22 Order book at Rs116bn (equals 4x TTM Revenue) comprising Roads / Irrigation at 73% /27%. Q2FY22 order inflow stood at Rs7bn and close FY22E with order inflow of Rs30-35bn. During the quarter company also received an order from the widening of existing service roads of outer ring road, Hyderabad worth Rs21.3bn and 1 HAM project worth Rs10.4bn. Going forward, company is targeting to enter in the railway sector. Outlook on receivables: Q2FY22 Net working capital (NWC) days have reduced to 45 days vs 66 days QoQ. Out of the total receivables from the irrigation project of...

The execution momentum continued in 2QFY22 despite the monsoon. The workforce strength has reached pre-COVID levels. Execution was primarily driven by HAM projects during the quarter....

We value KNRCL EPC business at 17.5x FY24 EPS and HAM portfolio at 1x book value with a target price of Rs 360/share, implying an upside potential of 17% from CMP. We maintain our BUY rating on the stock.

We initiate coverage with a BUY and value the EPC business at 17.5x FY24E EPS and HAM portfolio at 1x book value, to arrive at a target price of Rs.360/share, implying an upside potential of 17% from the current levels.

Q1FY22 revenue grew by 54% YoY driven by pick up in execution post ease in lockdown and increase in operational efficiency to 95% of pre-covid level. Order book stood at Rs11,679cr (incl. L1) which is 3.9x TTM revenue and adds revenue visibility for two to three years. EBITDA margin declined by 31bps YoY to 19.4% due to higher material cost and other expenses. The management expects an order inflow of ~Rs3,000cr in...

Targeting order inflow of Rs30-40bn in FY22: Q1FY22 Order book at Rs117bn (incl L1 and OB equals 4x TTM Revenue) and during the quarter KNRC has received 1 HAM project worth Rs10bn. And company is targeting additional orders of Rs20-30bn in remaining part of FY22E. In irrigation orders of Rs30bn , KNR has land issue for orders of Rs7bn (Kerala order) and expect all requisite approval by Jan-22E. Outlook on receivables: Q1FY22 Net working capital (NWC) days has reduced to 66 days vs 82 days QoQ. Receivables of Rs6.5bn (vs Rs5bn as on FY21) are still pending from the Government of Telangana. Out of which company expects to receive...

Price escalation clause in roads agreement and higher margins at irrigation projects likely to keep operating margin elevated Key Risk: (i) Delay in HAM projects execution; (ii) Any working capital...