MOSL: KNR CONSTRUCTION (Buy)-Another strong quarter; order book remains robust
KNR CONSTRUCTION: Another strong quarter; order book remains robust
(KNRC IN, Mkt Cap USD1.1b, CMP INR286, TP INR330, 15% Upside, Buy)
- KNR Construction (KNRC) continued its steady performance with revenue growth of 54% YoY, surpassing our expectations by 23%. The order book (OB) was strong at INR117b (including L1 orders worth INR51b), with the OB/revenue ratio at 3.9x.
- Pending receivables from the Telangana government now stand at INR6.5b (including unbilled revenue), of which INR2.7b receivables are already overdue. Some amount of delay is attributable to the ongoing pandemic, and the company expects to recover the overdue receivables within the next two to three months. The company is debt-free at the standalone level, with a net cash position of INR470m at 1QFY22-end (v/s net cash of INR1.2b at FY21-end).
- We cut our FY22 estimate on account of the shift to the new tax regime, while we raise our FY23/FY24 estimate by 5.3%/5.1%. TP increased to INR330 on a) 16x Sep’23E EPS for the EPC business and b) P/Inv of 1x for assets. Maintain
KNR Constructions Limited. KNR Constructions Limited is an India-based holding company. The Company is a multi-domain infrastructure project development company. The Company undertakes engineering, procurement and construction (EPC) contracts, as well as build-operate-transfer (BOT) projects across various sectors, such as construction and maintenance of roads, highways, flyovers and bridges. Its range of verticals also include irrigation projects, water management, agriculture and trading business. It has completed approximately 5,890 kilometers of projects across over 10 states in India. Its urban water infrastructure management project is Challaghatta Main Valley Project, which involves the remodeling of primary and secondary storm drains, bridges/culverts and related works in Challaghatta Main Valley in Bangalore City. The Company's irrigation and water management projects include Shankara Samudram Balancing Reservoir, Eastern Kosi Canal system, Reservoir across Mathadivagu and Budpur Balancing Reservoir.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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