View Full Version : KNR Constructions Limited (NSE:KNRCON) (BSE:532942)

08-20-2015, 10:21 AM
KNR Constructions Limited (KNRCL) is an infrastructure development organization. The Company’s segments include Express ways, National Highways, State Highways & Rural Roads, Flyovers, Bridges and Viaducts, Irrigation Projects, Urban Development - Civic amenities and Commercial and Residential Projects. The company is engaged in approximately 20 projects across India, covering Arunachal Pradesh, Bihar, Madhya Pradesh, Andhra Pradesh, Karnataka, Kerala and Tamil Nadu. The projects include Bijapur - Hungund Section of NH - 13 - Karnataka (INDIA), Ganjam-Sunakhala of NH-5 - Orissa (INDIA), Lumding to Lanka section i/c Lanka Bypass of NH-54 - Assam (INDIA), Madurai – Kanniyakumari of NH - 7 - Tamilnadu.

Official Website: www.knrcl.com

08-20-2015, 10:22 AM
KNR Constructions (KNR) reported a poor set of numbers for 1QFY2016. On the top-line (standalone) front, it reported a 27.6% yoy decline to Rs171cr. Further, EBITDA and PAT numbers reported yoy decline, but at a lower pace than the topline, indicting yoy margin expansion. Sharp decline in sub-contracting and other expenses contributed to 122bp yoy EBITDA margin expansion to 14.4%. EBITDA margin expansion coupled with higher other income helped KNR report improvement in its PAT margins to 8.8% for the quarter. KNR’s order book as of 1QFY2016 stands at ~Rs3,541cr, which gives strong revenue visibility for over the next few quarters. Valuation: Improved order book, strong earnings growth potential, and comfortable Balance Sheet, strengthen our view that KNR would continue to trade at rich valuations. On valuing the standalone entity at 14.0x our FY2017E EPS of `37, and adding up free cash flow to equity shareholders value for its Kerala based BOT project, we arrive at FY2017E sum-of-the-parts (SoTP) based price target of Rs582/share, implying that the KNR stock is close to its fair value. Given the limited upside potential the stock has from current levels, we maintain our Neutral rating on the stock.

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