Motilal Oswal's research report on KNR Constructions
KNR Constructions (KNR)'s order book to bill ratio stood at ~2.5x of FY22 revenue that provides topline visibility over the next two years. Though the company has not won any notable orders in FY23, its tender pipeline is robust. KNR is aiming INR30-40b of order wins in the remaining months of FY23. Management is also looking to bid in other regions within India. However, the focus area would continue to be on the Roads segment. KNR is likely to go slow on bidding for Irrigation projects until its pending Irrigation order book is executed and payments are received. With monsoon impact behind, the execution is likely to pick-up during 2HFY23 propelled by the Road segment, while execution in Irrigation would be slow and subject to receipt of payments from authorities. KNR is targeting to clock a revenue of INR35b for FY23E. We believe a strong tender pipeline in Roads can translate into decent order inflows in the coming months, which can provide greater visibility on growth beyond FY24. Based on the current order book of INR80b, we expect KNR to clock 14% revenue growth over FY22-24, with EBITDA margin in the 18-19% range.
Outlook
We maintain our BUY rating with a SoTP-based TP of INR310, implying 21% potential upside.
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