KNR Constructions - Q4FY21 First Cut - ICICI Direct

(CMP: Rs. 217; MCap: Rs. 6,112 crore)

KNR Constructions reported healthy performance during Q4FY21 with topline at standalone level beating our estimates. However, bottomline got impacted with higher tax outgo.

Q4FY21 Earnings Summary

- Standalone revenue during Q4FY21 improved 38.5% YoY to Rs. 935.8 crore (vs. I-direct estimate of Rs. 756.7 crore; 12% YoY growth). The strong revenue growth is mainly backed by a) its strong order book position, b) receipt of appointed date in most of its projects and c) normalization in labour availabilities and smoothening of raw material supply chain

- The company continued to deliver industry leading operating margin and stood at 19.5% during Q4FY21 (down 227 bps YoY) - slightly below the I-direct estimated EBITDA margin of 20.0%. The company has also charged ~Rs. 5,1 crore towards expenditure for arbitration claim (of Rs. 12.2 crore which has been adjusted against receivables), Adjusted for that, margins were in line

- Strong operating performance coupled with lower interest expense translated into healthy 72.8% YoY growth (to Rs. 148.5 crore) in PBT. However, PAT improved 14.5% YoY to Rs. 77 crore (vs. I-direct estimate of Rs. 82.3 crore) mainly impacted by higher tax outgo

- KNR's order book (at the end of December 2020) was healthy at Rs. 7,664 crore (2.8x FY21 book-to-bill). Additionally, the company has secured four projects in Q4 (two HAM, two EPC road projects) having combined value of Rs. 5,668 crore, which has strengthened its order book further

We currently have a positive outlook on KNR Constructions considering a) strong execution, b) elevated level of margins, c) best in class working capital cycle, d) monetization of BOT/HAM assets, e) healthy balance sheet, and f) strong return ratios. We await management commentary on future outlook, order inflows target, execution ramp-up, impact of state-wise lockdown on key projects, asset monetisation and update on receivables.

Shares of KNR CONSTRUCTIONS LTD. was last trading in BSE at Rs.217.35 as compared to the previous close of Rs. 216.15. The total number of shares traded during the day was 100041 in over 1900 trades.

The stock hit an intraday high of Rs. 222.2 and intraday low of 210.6. The net turnover during the day was Rs. 21903821.

Source : Equity Bulls

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