KNR Constructions Ltd. share price target

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....

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. Q3FY20 revenue grew by 24% YoY due to strong execution of HAM projects & arbitration claim of Rs4.6cr. EBITDA margin improved by 222bps YoY to 22.3% due to 72% YoY fall...

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....

Order book at | 6,523.3 crore as of Q3FY20 KNR's order book (OB) order book was at | 5,888.3 crore as of Q3FY20, implying 2.9x order book-to-bill ratio, giving revenue visibility ahead. This OB does not include | 920 crore Palani HAM project. KNR is looking forward to incremental | 1,000-1,500 crore order inflow in February, March, 2020 & | 2,000-2,500 crore in FY21E. On the execution front, the management has guided at completing the three ongoing HAM projects in FY21E. The KSHIP project has received appointed date in February, 2020 and execution is...

KNR delivered yet another steady quarterly performance. Order wins are on track with 4QFY20 ask at Rs 8bn to meet the Rs 30bn FY20 order intake guidance. KNR has entered into Kerala BOT stake sale arrangement with Cube Highways for equity consideration of Rs 3.9bn (expected by Mar/Apr'20). For 3 HAM projects Rs 1.7bn investment, KNR expects to receive Rs 3.3bn over the next 4yrs. Strong balance sheet, periodic BOT/HAM equity churn and robust execution capability reinforces our positive stance on KNR. We maintain BUY. Key risks (1) Slowdown in government ordering (2) Higher crude and cement prices (3) Increase in interest rates and (4) Further liquidity tightening in the financial sector. We maintain BUY on KNR with SOTP-based TP of Rs 376/sh (valuing core EPC business 18x FY21EPS at Rs 317/sh, Subsidiaries Rs 60/sh). KNR delivered yet another steady quarter with Revenue/EBIDTA/APAT beat/(miss) of (0.4)/17/(12)% respectively.

KNR Constructions' (KNRC) Q3FY20 core revenue ex-arbitral awards grew 23% YoY to Rs 5.5bn and core EBITDA margin beat estimates at 22% (+170bps YoY).

KNR constructions (KNR), reported a decent topline growth and stellar operating margins. On a standalone basis revenue grew by 24% YoY to INR 558 cr which was below expected 30% YoY growth.

Enters into SPA with Cube for Walayar BOT project KNR has entered into a share purchase agreement (SPA) with Cube Highways to sell its 100% entire equity stake in KNR Walayar Tollways BOT toll asset. The EV of this deal is | 529.3 crore excluding claims receivables (worth | 170 crore) from NHAI & other government instrumentalities, which would be passed to KNR Constructions as and when realized. As of Q2FY20, KNR Walayar SPV had total | 143.1 crore debt, implying equity value of | 386.2 crore. KNR had infused total | 397.4 crore in this toll project, which...

10 January 2020 KNR has entered into a share purchase agreement with Cube Highways to sell its 100% stake in the Walayar road project. Total enterprise value of the deal stands at INR5.3b. As of Sep19, debt on the project was at INR1.4b. Thus, the equity value of the deal is estimated at ~INR3.9b or P/Inv of ~1x. This is in line with our valuation of the project. There are further NHAI claims and other governmental instrumentalities, which are a pass through to KNR as and when realized. Taking this into account, the deal value may surpass our valuation of the project. The transaction is likely to close in another 2-3 months. We factor in proceeds of INR3.9b by end-Mar20. KNR has already monetized three of its HAM projects. We expect the balance sheet to strengthen further with net cash position of >INR2b/5b by FY21/22.

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....

KNR Constructions (KNR), reported a stellar set of numbers well making up for poor performance in last quarter.

Orderbook at | 6,681.8 crore as of Q2FY20 KNR's order book (OB) was at a strong | 6,681.8 crore (including the recently won HAM project and Karnataka State Highways Improvement Project (KSHIP) HAM project), implying order book-to-bill ratio of 3.1x (on TTM basis). The OB consists of | 4,830.6 crore from roads division and | 1,850.4 crore from irrigation. On the new orders front, it secured order inflows (OI) worth | 1,800 crore (comprising | 1,700 crore irrigation projects and | 100 crore from change in scope at certain projects). KNR is targeting incremental...

KNR Constructions (KNRC) Continued to report a strong operating performance in 2QFY20 with margin exceeding our estimate with the wide range yet again. Revenue grew by 31% YoY and 17% QoQ to Rs5.5bn (including Rs180mn claims received/booked in revenue) vs. our estimate of Rs5.1bn mainly led by pick-up in execution in HAM projects. Adjusted for claim booked, EBITDA margin stood at strong 19.7% way ahead of ours and even the Company's own guidance. APAT declined by 7% YoY to Rs420mn (but higher than our estimate of Rs395mn) mainly led by higher tax, as new projects do not enjoy any tax benefit. Order book as on 30th Sept'19 stood at Rs51.5bn (excluding Rs15.4bn EPC order components from 2 AD pending HAM...

KNR Constructions' (KNRC) Q2FY20 core revenue ex-arbitral awards grew 26% YoY and core EBITDA margin beat estimates at 20.6% (+60bps YoY).

KNR delivered yet again another robust quarterly performance. Kerala/Muzaffarpur BOT collection per day stood at Rs 1.8/2.2mn vs. Rs 1.9/2.7mn QoQ. KNR is in advance stage of selling Kerala BOT. For 3 HAM projects Rs 1.7bn investment, KNR expects to receive Rs 3.3bn over the next 4yrs. Strong balance sheet, periodic BOT/HAM equity churn and robust execution capability reinforces our positive stance on KNR. We maintain BUY. Key risks (1) Slowdown in government ordering (2) Higher crude and cement prices (3) Increase in interest rates and (4) Further liquidity tightening in the financial sector. We maintain BUY on KNR with SOTP-based TP of Rs 378/sh (valuing core EPC business 18x FY21EPS at Rs 319/sh, Subsidiaries Rs 60/sh). KNR delivered yet another robust quarter with Revenue/EBIDTA/APAT beat of 10/20/35% respectively.

KNR's order book (OB) was at a strong | 6,518.8 crore (including the recently won HAM project and Karnataka State Highways Improvement Project (KSHIP) HAM project), implying order book-to-bill ratio of 3.2x (on TTM basis). The OB consists of | 5,544.6 crore from roads division and | 972.8 crore from irrigation. On new orders front, it won Mallanna Sagar irrigation project worth | 850 crore in September, 2019. KNR is targeting another HAM order worth | 1,000-1,500 crore in FY20E. With this, we expect revenues to grow at 19% CAGR to | 3,031.1 crore in FY19-21E....

KNR has entered into share purchase agreement with Cube highways for 4 HAM projects wherein KNR will receive `3.58 bn against its equity investment of `2.0 bn (51% share). The average deal valuation works out at 1.8x P/B. Cube Highways will be investing 49% equity (1.9 bn) out of total requirement of 3.9 bn during construction period. On achieving CoD, Cube Highways will acquire 25% equity stake out of 51% from KNR and will acquire remaining 26% after expiry of lock in period (~2 years) post CoD. Thus, acquiring 100% stake from KNR....