KNR Constructions Ltd. share price target

KNR Construction (KNRC) PAT was higher than our estimate and is led by better execution (Q4FY21 revenue up 39% YoY). Despite pandemic which impacted Q1FY21, FY21 Revenue is up 20% YoY versus KNR guidance 10-11% increase. In Q4FY21 Project execution has gained pace and average execution efficiency stood at 95%. KNRC has highlighted the efficiency has reduced to 50-55% due to Covid in Q1FY22. But it expects momentum to pick up in the coming quarters and has guided for revenue of Rs30bn+ for FY22. Order Inflow in FY21 was highest ever for KNR. With this, KNR has strong order book of Rs114bn i.e. 4x FY21 revenue. But increase in the commodity prices could weigh on the EBITDA margin. We have lowered...

KNR Construction (KNRC) continued its steady performance with revenue growth of 39% YoY, surpassing our expectations by 19%. The company ended FY21 with revenue growth of 22% (despite the lockdowns). The order book (OB) was strong at INR71.2b, and including L1 orders worth INR43b, the OB-to-revenue ratio stood at 4.2x. The pending receivables from the Telangana government now stand at INR5b (including unbilled revenue), with some amount of delay attributable to the ongoing pandemic. Gross debt was negligible at INR7m at the end of...

At the end of Q4, KNR's order book was at | 7,117.9 crore, mainly contributed by irrigation (43.7%), roads - HAM (25.5%) and roads - EPC (30.8%) segments. Including the recently won two HAM and one EPC projects (worth | 4322.9 crore), its order book position was robust at | 11,441 crore (4.2x book to FY21 revenues). With a handful of orders, the company is aiming to bag | 3,000-4,000 crore of orders in FY22. Going ahead, KNR expects its execution pace to get impacted in the near term with decline in execution efficiency currently at ~65% (from 95% in Q4) owing to...

Maintaining healthy growth and light balance sheet

KNR construction LTD (KNRC) Q3FY21 EBITDA was higher than our estimate by 16%. This was led by better execution (revenue up 23% YoY) in the quarter. YTDFY21 order inflow stood at Rs40bn and KNRC guides for incremental orders of Rs30-40bn in Q4FY21. We have increased our execution run rate for FY21 and FY22 to 20% pa and this has resulted in increase in the EPS by 23%/28%. We have revised our valuation multiple for EPC construction business to 18x (earlier 15x), thus TP is revised to Rs254 (earlier Rs172). Stock is up 50% since Dec-20 and re-retaining ACCUMULATE rating on the stock. At our TP, implied valuation is 20x FY23E EPS (30% premium to +1 STD of its means of last 10 years)....

KNR Construction (KNRC) continued its steady performance in terms of execution by reporting revenue 6% above our expectation. EBITDA margin remained higher than our estimate of 19% on rising share of higher margin Irrigation projects (29% of total revenue in 3QFY21). Order book (OB) stood...

Healthy order book position; execution to pick up ahead KNR's order book was robust at | 7,664 crore (3.1x order book to TTM revenues), mainly contributed by irrigation (45%), roads - HAM (30%) and roads - EPC (25%) segments. Additionally, KNR secured a road EPC project worth | 539 crore in Tamil Nadu in January, 2021, strengthening its order book further. Going forward, the company has submitted bids for 16 road projects (15 HAM, one EPC) worth ~| 20,000 crore and aims to bag ~| 3,000-4,000 crore of orders in remainder of FY21. On execution front, its...

KNR Constructions reported a strong quarter with revenue (up 23% YoY) and margins coming above our and street estimates. EBITDAM sustained at higher levels of 19.7% mainly due to higher share of irrigation projects in revenue mix (29% in 3Q) as well as Order Book (at 45%). Working capital position remains strong on the back of timely payments from NHAI & other State/Central Govt authorities. Realization of large part of dues (Rs5.4bn) from Telangana Govt further strengthened the liquidity position. On the backdrop of strong order book, healthy bid pipeline and sustained liquidity...

Together, roads & highways were clearly the most resilient segment of infrastructure. On the overall capex front, for roads and highways, the revised estimates (RE) FY21E spends is pegged ~12%, higher at | 92053 crore vs. budgeted estimates (BE) of | 81975. Even for FY22E, the government has pegged the road capex at | 108230 crore, growth of 17% YoY on a decent FY21 base. Of the total allocation, the National Highways Authority of India (NHAI) will get | 57,350 crore, up from | 49,050 crore in FY21RE. The government is also looking to provide alternative...

Lean balance sheet: KNRC has invested Rs2.5bn in HAM projects plan to invest Rs4.1bn until FY23E. This will be funded from internal accruals. KNRC balance sheet continues to remain lean with H1FY21 standalone debt at Rs640mn and Debt to Equity at...