KNR Constructions - Q3 FY21 Result Update - YES Securities

(Rating: BUY, TP: Rs 256, Upside 15%)

- Our View - With better labor availability and with Monsoon largely behind, execution momentum is likely to continue through Q4 FY21. Operating margin is expected to remain healthy at ~17-18% levels driven by the high margin irrigation projects. The order book is in a comfortable position with ~3.5x FY21E revenues. The robust bid pipeline, continued focus on asset monetization and comfortable balance sheet position provide comfort. We increase our estimates to factor in the robust Q3 performance and improved outlook and maintain our BUY rating for revised target of Rs256 (based on SOTP valuation).

- Order book - The orderbook for the company stands at Rs.76 bn of which irrigation forms 45%, HAM Road projects at 30% and balance being EPC. The Order book excludes the recently won Road EPC project. The Company has bid for ~15 projects is targeting new order inflows of ~Rs.30-40 bn in FY21. The incremental projects are expected from NHAI. Additionally the Company is also looking to bid for urban infra projects.

- Government focus - The Government is focused on Infra spending which would help support the Order inflows for the industry and the Company. The budget allocation has been sufficiently high and would allow for more project awarding.

Shares of KNR CONSTRUCTIONS LTD. was last trading in BSE at Rs.218.85 as compared to the previous close of Rs. 222.05. The total number of shares traded during the day was 70532 in over 1713 trades.

The stock hit an intraday high of Rs. 227.8 and intraday low of 217.2. The net turnover during the day was Rs. 15715661.

Source : Equity Bulls

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