KNR Construction Q1 Results Review - Strong Business Strategy To Improve Performance: Nirmal Bang

Nirmal Bang Report

Key Points

• KNR Constructions Ltd.'s revenue came in (actual/estimated: Rs 9,296 million/Rs 10,732 million) and Ebitda (actual/estimated: Rs 1,733 million/Rs 1,914 million). The overall industry was impacted by the slow bidding process in Q1 FY24.

• The management guided for a 2-2.5% decline in Ebitda margin for FY24, due to reduced execution in the irrigation business and a rise in material costs.

• We still believe KNR Construction is a good investment as it has low leverage, a good book-to-bill ratio (three times), stable operational cash flow; and effective working capital management.

• Based on actual investments made, we value the standalone company at 15 times June-25E profit after tax and the asset business at one time price/book to arrive at a target price of Rs 299.

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