KNR Constructions Ltd. share price target

With fasterthanexpected rampup in operations and entire order book (current) coming under execution during H2 FY21, we have marginally increased our revenue estimates for FY21/FY22....

19 August 2020 KNR Construction (KNR) outperformed in terms of execution by reporting revenue growth v/s our expectation of 35% YoY decline. The EBITDA margin expanded YoY on account of the rising share of higher margin irrigation projects, resulting in a strong beat on earnings. Including L1 orders, the order book (OB) stood strong at INR78.5b, implying OB/rev at 3.5x and providing healthy revenue visibility. KNR continues to surprise with its steady performance. However, the working capital cycle has witnessed marginal deterioration. This is primarily on account of pending dues from the Telangana government, which have been stalled since Feb20 and currently stand at INR6.8b. The management hopes to receive INR4.4b within the next few weeks. Factoring the strong performance in 1QFY21, we increase our FY21/FY22E EPS by 28%/7%. We maintain our (b) the book value of road assets.

Stake sale in KNR Walayar Tollways BOT project to Cube Highways is in final stage of negotiations and is expected to conclude in next two months. KNR Constructions posted strong results beating our & street estimates, despite Covid-19 pandemic impacting execution. Margins were better with...

We broadly maintain our revenue estimates however, we increase our EBITDA margin estimates by 48/ 50 bps for FY21E/ FY22E factoring Q1FY21 results. We have sizably lowered our depreciation estimates and increase our tax rate and accordingly increased our PAT estimates by 10.9%/ 10.4% for FY21E/ FY22E. Labour availability currently stands...

Q4FY20 revenue declined by 6% YoY due to Covid led disruption in execution while PAT declined by 27% YoY. EBITDA margin improved by 161bps YoY to 21.7% due to...

Its penchant to deliver better than expected on execution and margins continued even during the Covid-impacted Q4. More inspiring were pruned gross and net debt, implying management continues to strike a fine balance between the income statement and balance sheet. With its sound strategy intact, we see the Covid-disruption as short-lived, and KNR recovering from this largely unscathed (consequently, better placed). It also appears insulated from an expected near-term slowdown in ordering, thanks to the recently added irrigation orders....

KNR's order book was at | 5,229.7 crore as of Q4FY20. Including the Palani HAM project and newly won irrigation orders, total backlog at ~| 7888 crore, provides strong revenue visibility of 2.5-3 years. Additionally, the company has bid for state highway annuity project in Tamil Nadu (~| 500 crore) and is looking to bid for five to six HAM projects in NHAI in FY21, whenever bidding opens. Consequently, the company is looking forward to...

Out of its Portfolio of 5 HAM Projects, a) KNR Srirangam has achieved 37.4% physical progress,b)KNRTirumalaachieved54.4%,c)KNRShankampetachieved43.7%andd)KNR Somwarpeth achieved 6.9% progress. In the 5th HAM project namely KNR Palani, the companyhassubmittedfinancialclosuredocumenttoNHAIon22ndMay'20andexpectsto...

We expect a 17.6%/ 9.7% revenue/ Adj. PAT CAGR over FY20-22E, with EBITDA margins of 17.0% each for FY21E/ FY22E. Considering pick up in execution from Q3FY21E, healthy return ratios, a well-managed balance sheet, comfortable working capital, low D:E, and quality management, we maintain BUY with a SOTP-based TP to Rs247 (12x FY22E EPS and 1.2x PB for HAM + BOT investment). We have excluded KNR Walayar Tollways valuation from our SOTP as KNR has signed a deal with Cube Highways for sale at EV of Rs5.3 bn....

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.