Buy KNR Constructions, target price Rs 317: Centrum Broking

Centrum Broking has buy call on KNR Constructions with a target price of Rs 317. The current market price of KNR Constructions is Rs 223.3. Time period given by analyst is one year when KNR Constructions Ltd. price can reach defined target.

KNR Constructions Ltd., incorporated in the year 1995, is a Mid Cap company (having a market cap of Rs 6288.41 Crore) operating in Infrastructure sector.

KNR Constructions Ltd. key Products/Revenue Segments include Income From Contracts and Other Operating Revenue for the year ending 31-Mar-2022.


Financials
For the quarter ended 30-06-2022, the company reported a Consolidated Total Income of Rs 990.57 Crore, down -11.71 % from last quarter Total Income of Rs 1121.91 Crore and up 21.98 % from last year same quarter Total Income of Rs 812.09 Crore. Company reported net profit after tax of Rs 92.26 Crore in latest quarter.

Investment Rationale
KNR’s stock has been weighed down by concerns over elevated receivables and execution uncertainty of its irrigation backlog (especially in respect of Kaleshwaram orders). Valuations at 12.5x FY24E earnings have corrected meaningfully along with a narrowing of premium over peers. While lenders have currently suspended further disbursements leading to execution slowdown, Kaleshwaram continues to be a top priority project for Telangana with significant social and political implications. It is difficult to time the resolution of the stalemate but it expects the state government to put its weight behind the project to ensure its completion (~80% of revised capital cost spent so far). KNR is a top quality EPC company with proven track record of execution, capital allocation and governance. It finds the stock attractive at current levels and recommend Buy with revised PT of Rs317.


Promoter/FII Holdings
Promoters held 51.09 per cent stake in the company as of 30-Sep-2022, while FIIs owned 5.73 per cent, DIIs 34.59 per cent.