KNR Construction - Q4FY20 First Cut - ICICI Securities

CMP - Rs. 202, Market Cap - Rs. 2836 crore

KNR reported better than expected Q4FY20 led by superior margins which percolated to PAT level beat.

Q4FY20 earnings summary

- Topline came in at Rs. 675.6 crore, down 5.6% YoY (largely in line with estimates of 5% decline) with topline decline largely led by impact of Covid-19

- EBITDA came in at Rs. 146.9 crore, up 2% YoY (higher than our estimate of Rs. 105 crore). The consequent margin was higher at 21.7% (up 160 bps YoY) and much better than estimates of Rs. 15.4%

- The company reported a PAT of Rs. 67.2 crore (down 27% YoY) vs. expectations of Rs. 30.5 crore, with beat led by superior EBITDA. The decline in PAT on YoY basis,, was owing to higher depreciation (irrigation project led), higher interest (largely due to mobilisation advances) and lower tax in the base quarter

- The order book stood at Rs. 5229.7 crore as on Q4FY20, with further Rs. 2310 crore order inflow in May 2020, implying healthy TTM order book to bill of 3x

- Another positive takeaway was reduction in debt by ~Rs. 50 crore YoY to Rs. 214 crore, D/E of 0.1x and Net Working Capital being comfortable at 53 days (albeit tad higher than last quarter's 43 days)

KNR's performance, albeit weak on YoY basis, was better than expected on the operational front with comfortable debt and working capital being a key positive. We expect the EPC execution to take a hit in the first half of FY20 owing to lockdown effect, labour scarcity and monsoon. We await management commentary on execution outlook and ordering traction. We will soon come up with an update.

Shares of KNR CONSTRUCTIONS LTD. was last trading in BSE at Rs.203.15 as compared to the previous close of Rs. 206.9. The total number of shares traded during the day was 24972 in over 1303 trades.

The stock hit an intraday high of Rs. 213.45 and intraday low of 200. The net turnover during the day was Rs. 5212352.

Source : Equity Bulls

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