KNR Constructions Ltd - Result Update - BUY - TP Rs.306 - Kotak

KNR Constructions reported mixed Q2FY18 results. Net sales for the quarter grew at a slower pace of 5% yoy to Rs 3.9 bn on high rainfall at project sites and implementation of GST slowing execution. EBITDA for the quarter stood at Rs 825 mn, up 47% yoy with EBITDA margins at 21% up 600 bps yoy. The improvement in margin was due to lower subcontracting and higher contribution from projects nearing completion. Based on strong margins in most of the current projects, the company targets for 16-17% EBITDA margins in FY18. KNR has an order backlog of Rs 35.9 bn at the end of Q2FY18. Further, it has strong bid pipeline in roads space and targets to add Rs 20-25 bn of new orders in six months. Based on execution timeline of current order book and future order pipeline, the company maintained its guidance to achieve over Rs 17-18 bn and Rs 20 bn of revenue in FY18E and FY19E, respectively. The company has track record of beating its guidance and we expect the trend to continue looking at order book and order pipeline. We revise our EPS estimates upward factoring in higher margins in H1FY18. We maintain our BUY rating on the stock with revised target price of Rs 306 (Vs Rs 236 earlier).

Shares of KNR CONSTRUCTIONS LTD. was last trading in BSE at Rs.276 as compared to the previous close of Rs. 275.75. The total number of shares traded during the day was 26374 in over 584 trades.

The stock hit an intraday high of Rs. 285 and intraday low of 275.25. The net turnover during the day was Rs. 7372959.

Source : Equity Bulls

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