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By Zachary T. Rossi
Feb 16, 2022 11:29 a.m. IST


KNR Construction Q3FY22 Review – Commendable Performance
Source: IRIS | February 16, 2022, 10:17 a.m.


Evaluation: NOPE / 5 stars.
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KNR Constructions (KNRC) Q3FY22 (standalone) PAT is in line with our consensus estimate. Revenue increased 12% YoY and surprisingly EBITDA margin increased 100bps YoY to 20.7%. The working capital is further reduced to 40 days because the company has recovered its receivables. Debtor days reduced to 55 days from 74 QoQ days. For FY22E, KNRC has guided for an order inflow of Rs 60 billion and has received an influx of Rs 40 billion till date. Order book at Rs100 billion equal to 3x TTM revenues, with a contribution from the road sector at 74%.

“Maintain the buy rating on the stock with a revised TP at Rs 361 valued at 16x FY24E EPS (earlier Rs 345). stable EBITDA margin of 19-20%,” said

IDBI Capital Equity Research.Key Highlights and Investment Rationale

T3FY22 preview:

 KNRC achieved a turnover of 7.7 billion rupees (+12% year-on-year). EBITDA at 1.6 billion rupees, +17% over one year with an EBITDA margin of 20.7% against 19.7% over one year. Adj PAT stood at Rs 0.9 billion, +11% YoY. The reported PAT is adjusted for a gain of Rs213mn reserved after the sale of two submarines to the Cube highway. At the consolidated level, revenue increased by 16% over one year but EBITDA fell by 21% over one year due to exceptional items related to costs related to the sale of a stake in 2 projects HAM.

Order Entry Purpose: YTDFY22 Order book at Rs100bn (equivalent to 3x TTM Revenue) including Roads HAM/ Roads other/ Irrigation at 43%/ 31% / 26%. Order inflow till date was Rs 40 billion and Rs 20-30 billion is expected in Q4FY22E. For incremental irrigation, the company is focusing on orders from Telangana, although the working capital cycle there is high, but it offers a high EBITDA margin.

Disclaimer: IRIS has exercised care and caution in compiling the data for its website. The information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of this information. In particular, IRIS declares that it does not assume any financial responsibility vis-à-vis any user due to the use of the information provided on its website.

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Zachary T. Rossi
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