Buy KNR Constructions; target of Rs 240: ICICI Direct

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ICICI Direct's research report on KNR Constructions

KNR Constructions’ (KNR) topline came in at Rs 675.6 crore, down 5.6% YoY impacted by Covid-19. EBITDA came in at Rs 146.9 crore, up 2% YoY with consequent margin higher at 21.7% (up 160 bps YoY) on account of higher proportion of revenues from HAM and high margin irrigation projects. PAT was at 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 a YoY basis, was owing to higher depreciation (irrigation project led), higher interest (largely due to mobilisation advances) and lower tax in the base quarter.

Outlook

At the CMP, KNR is trading at attractive valuations of 5.7x FY22E EV/EBITDA. Considering strong execution, best in class WC, monetisation of BOT/HAM assets, healthy balance sheet and strong return ratios, we maintain our BUY recommendation on the stock with an SoTP target price of Rs 240/share.

For all recommendations report, click here

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