KNR Constructions - Q4 FY21 Result Update - YES Securities

(Rating: BUY, TP: Rs261, Upside: 15%)

- KNR Constructions reported topline growth of 39% yoy (at Rs.9.3 bn) driven by higher execution.

- Operating margin remained at elevated levels of ~19.5% (-228 bps yoy/ -24 bps qoq). This was in line with our estimates of 20% margins. The margins were strong due to execution of high margin irrigation projects. Higher tax outgo saw PAT grew by 15% yoy to Rs.770 mn.

Our View: The Company has ended the year on strong note with Order book at ~4x FY21 revenues. We expect KNR to clock in topline growth of ~15% during FY22 driven the existing order book (excluding projects recently won as they would take time to start). We expect the margins to fall to ~17% (from usual levels of 19-20%) primarily due to sharp increase in input costs which the Company may not be able to entirely pass on. The receivables position which has been impacted due to delayed payments from state projects is expected to normalize in next few months. We have marginally revised our earnings estimates lower to factor in slower than expected execution due to COVID related restrictions in Q1 FY22 and increase in input costs. We maintain our BUY rating on the stock for target price of Rs.261 (based on SOTP valuation). We value the standalone business at 14x FY23 EPS and the investment in BOT asset at book value.

Shares of KNR CONSTRUCTIONS LTD. was last trading in BSE at Rs.233.9 as compared to the previous close of Rs. 227.6. The total number of shares traded during the day was 102022 in over 2198 trades.

The stock hit an intraday high of Rs. 234.4 and intraday low of 230.15. The net turnover during the day was Rs. 23726247.

Source : Equity Bulls

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