Result Update: KNR Constructions Ltd - BUY - TP Rs.283 - Kotak

KNR Q1FY19 results was ahead of our estimates led by strong in certain old projects.

Key Highlights

- Revenue for the quarter grew by 15.7% yoy to Rs 5.5 bn (Vs estimates of Rs 4.2 bn) led by strong execution in its older projects which boost revenue for the quarter.

- EBITDA margin at 19.7% was ahead of our estimates on account of reversal of provisions for completed projects and increased contribution from projects nearing completion.

- KNR has an order book of Rs 59.5 bn (including estimated EPC component of 5 HAM projects). The company is targeting to add Rs 20-25 bn of new projects from road space in FY19E.

Outlook and Valuation

- The company management has reduced its revenue guidance for FY19E from ~Rs 20 bn revenue in FY19E to ~Rs18bn (10-15% yoy decline). This is based on execution timeline for current order book and land acquisition status of HAM projects with EBITDA margins of 13.5-14.5%.

- We have cut our EPS estimates for FY19E and FY20E by 17% and 10% respectively. The EPC business (adjusted for Rs 33 per share value of BOT) is available at a PE of 19.5x and 12.6x based on FY19E and FY20E revised EPS of Rs 10.1 and Rs 15.6 per share, respectively. We maintain our Buy rating on the stock with revised SOTP based target price of Rs 283 (Vs Rs 346 earlier)

Shares of KNR CONSTRUCTIONS LTD. was last trading in BSE at Rs.229.1 as compared to the previous close of Rs. 228.9. The total number of shares traded during the day was 3779 in over 125 trades.

The stock hit an intraday high of Rs. 230.6 and intraday low of 226.75. The net turnover during the day was Rs. 865851.

Source : Equity Bulls

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