Company Update: KNR Constructions Ltd - BUY - TP Rs.236 - Kotak

KNR Constructions is focusing on growing its order book by adding new projects in road and irrigation space. The company has strong bid pipeline in road sector from Hybrid Annuity Model (HAM) based projects in south India. The company targets to add Rs 20-25 bn per annum of new orders in FY18E and FY19E. It is well placed/L1 in ~Rs 16 bn of new projects in road and irrigation space which would help it in achieving its guidance. Its strong balance sheet with low net debt to equity at 0.1x gives edge over many of its peers in meeting funding requirement in future HAM projects. Its order book of Rs 33 bn (in Q1FY18) with all of its projects moving on expected lines and strong future order pipeline gives revenue growth visibility for FY18E and FY19E. We believe that Q2FY18 revenue will not have any major impact of rainfall in south and expect KNR to exceed its annual guidance of Rs 17-18 bn of revenue. The company has track record of beating its guidance and we expect the trend to continue looking at order book and future pipeline. We maintain our estimates and upgrade our rating on the stock to BUY (from Accumulate) with unchanged target price of Rs 236.

Shares of KNR CONSTRUCTIONS LTD. was last trading in BSE at Rs.213.5 as compared to the previous close of Rs. 206.6. The total number of shares traded during the day was 25823 in over 649 trades.

The stock hit an intraday high of Rs. 215.9 and intraday low of 207. The net turnover during the day was Rs. 5490411.

Source : Equity Bulls

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