Company Update: KNR Constructions Ltd - BUY - TP Rs.348 - Kotak

KNR Constructions, a strong player in road construction in south is focusing on growing its order book by adding new projects in road sector. The company has been awarded first Hybrid Annuity project (HAM) from NHAI of value Rs 10.2 bn in the state of Tamil Nadu. This is the first major road project bagged by the company in FY18E and would strengthen its order book to ~Rs 43 bn from Rs 33.3 bn at the end of Q3FY18. The company is also lowest bidder (L1) in another HAM project of Rs 11.7 bn in Karnataka where awarding is expected in near future. The company has strong bid pipeline of road projects in south India particularly in HAM segment and targets to add Rs 25-30 bn of new orders in FY18E. The company has net cash balance sheet at standalone level and hence it is confident to achieve financial closure of HAM projects. The company has maintained its guidance to achieve over Rs 18 bn revenue in FY18E and Rs 21 bn in FY19E. KNR has track record of beating its guidance and we expect the trend to continue looking at its order pipeline. We have maintained our earnings estimates and recommend BUY on the stock (Vs Accumulate) with target price of Rs 348.

Shares of KNR CONSTRUCTIONS LTD. was last trading in BSE at Rs.296 as compared to the previous close of Rs. 291.85. The total number of shares traded during the day was 7352 in over 244 trades.

The stock hit an intraday high of Rs. 298.8 and intraday low of 292. The net turnover during the day was Rs. 2167387.

Source : Equity Bulls

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