KNR Constructions - Q1FY21 Result Update - YES Securities

BUY (Target Rs304, Upside 18.4%)

KNR Constructions reported topline growth of 3.2% yoy (to Rs.4.8bn), well ahead of street and our expectations. Despite Covid-19 impacting operations, the execution stands out as compared to some of the other EPC Companies which have reported significant de-growth. Operating margin remained at an elevated level of 19.7% (up 30bps yoy). PAT declined 16.6% yoy to Rs.398mn largely due to lower other income and higher tax outgo. At the end of Jun'20, KNR's order book stood heathy at ~Rs.72bn (excluding 1 HAM projects estimated to have EPC value of Rs.6.4 bn), Additionally, the management is targeting ~Rs.20bn of inflows during FY21 (mainly from road segment). The appointed dates (AD) in 4 HAM projects are in-place and are under-execution. In the 5th HAM project namely KNR Palani, the company has submitted financial closure document to NHAI on 22nd May'20 and expects to achieve AD by 31st Aug'20.

KNRC expects execution to commence in the recently won irrigation projects over next two-three months. The entire order book (current) is expected to come under execution during H2 FY21. With faster-than-expected ramp-up in operations and entire order book (current) coming under execution during H2 FY21, we have marginally increased our revenue estimates for FY21/FY22. Continued focus on asset monetization and comfortable balance sheet position provide comfort. We maintain our BUY rating on the stock for revised target of Rs.304 (Based on SOTP valuation).

Shares of KNR CONSTRUCTIONS LTD. was last trading in BSE at Rs.257.2 as compared to the previous close of Rs. 240.15. The total number of shares traded during the day was 81866 in over 2754 trades.

The stock hit an intraday high of Rs. 258.35 and intraday low of 243.45. The net turnover during the day was Rs. 20650259.

Source : Equity Bulls

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