KNR Constructions Ltd. share price target

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....

Transaction of stake sale in KNR Walayar Tollways BOT project with Cube Highways is expected to be concluded by 1HFY21E. KNRC reported strong revenues with healthy margins for 4QFY20, beating our estimates primarily due to strong execution in key projects and rising...

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.

Construction remains one of the most severely impacted sectors due to the Covid-19 lockdown. The tolling at highways was stopped given the lockdown while execution of EPC/HAM projects has come to a blanket halt amid unavailability of labour and raw materials. We expect labour unavailability to persist even once the lockdown is lifted as it could take time for remobilisation of labourers. Also, even if the work at project sites resume within one or two weeks post the lockdown, the onset of the monsoon season from Q2FY20E could slow down execution, going ahead. Amid these...

Construction remains one of the most severely impacted sectors due to the Covid-19 lockdown. The tolling at highways was stopped given the lockdown while execution of EPC/HAM projects has come to a blanket halt amid unavailability of labour and raw materials. We expect labour unavailability to persist even once the lockdown is lifted as it could take time for remobilisation of labourers. Also, even if the work at project sites resume within one or two weeks post the lockdown, the onset of the monsoon season from Q2FY20E could slow down execution, going ahead. Amid these...

KNR Constructions (KNRC) continued to report robust operating performance in 3QFY20 despite lower-than-expected revenue booking. While revenue grew by 24% YoY to Rs5.6bn vs. our estimate of Rs6bn, EBITDA witnessed a stellar 38% YoY growth to Rs1.24bn vs. our estimate of Rs1.09bn. Adjusted for Rs37mn claim received for arbitration claim under revenue, EBITDA margin stood higher at 21.6% vs. 20.1% in 3QFY19 and 19.7% in 2QFY20. A meaningful increase in depreciation (led by higher capex in irrigation) and interest expenditures (due to mobilisation advances) and lower other income resulted in muted PBT of Rs588mn (-1% YoY and -35% QoQ). Further, KNRC's adjusted PAT declined by 14% YoY to Rs445mn owing to higher tax expenses....

KNR Constructions (KNRC) continued to report robust operating performance in 3QFY20 despite lower-than-expected revenue booking. While revenue grew by 24% YoY to Rs5.6bn vs. our estimate of Rs6bn, EBITDA witnessed a stellar 38% YoY growth to Rs1.24bn vs. our estimate of Rs1.09bn. Adjusted for Rs37mn claim received for arbitration claim under revenue, EBITDA margin stood higher at 21.6% vs. 20.1% in 3QFY19 and 19.7% in 2QFY20. A meaningful increase in depreciation (led by higher capex in irrigation) and interest expenditures (due to mobilisation advances) and lower other income resulted in muted PBT of Rs588mn (-1% YoY and -35% QoQ). Further, KNRC's adjusted PAT declined by 14% YoY to Rs445mn owing to higher tax expenses....