Buy KNR Constructions; target of Rs 390: HDFC Securities

HDFC Securities' research report on KNR Constructions

KNR delivered yet another strong quarter with Rev/EBIDTA/APAT beat of 21/26/51%. Roads/irrigation segment contributed 77/23% to the revenue. The order book (OB) is robust at Rs 85.5bn (~3.6x book to bill), having won projects worth Rs 34.6bn (1HFY21)and Rs11.6bn (2QFY21). The NHAI bid pipeline is strong with KNR targeting Rs 30-35bn inflow for the rest of FY21. Based on social distancing site efficiency is ~80% with KNR expecting Rs 6/7bn of revenue for 3Q/4QFY21. Of the outstanding Rs 7.4bn irrigation receivable about Rs 5.5bn may get realized by Nov-20 and balance by Mar-21.

Outlook

We maintain a BUY on KNR with target price of Rs 390/sh (15x Sep-22E EPS).

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