CMP: Rs 105.05
Target: Rs 101
KNR’s 3Q sales dropped 12.7 per cent to Rs 170 crore owing to delays in FC/approvals in some projects. Sales included bonus of Rs 14.7 crore (Rs 39.3 crore in 9MFY13 starting from May 2, 2012) on account of early completion of the Bijapur-Hungund project. KNR has guided for total bonus of about Rs 48 crore from the project (on account of early completion by 11 months) for FY13. EBITDA margin contracted by 410 bp to 17.2 per cent owing to rise in sub-contracting and other expenses (which as a percentage of sales stood at 26.6 per cent and 11.6 per cent compared to 16.7 per cent and 6.7 per cent in 3QFY12, respectively). Other income (Rs 4.4 crore v/s Rs 20 lakh) jumped sharply due to VAT refund of Rs 3.2 crore by the Karnataka State Government. We slash our sales estimates by 3 per cent/19 per cent for FY13/14 (excluding GVK’s Rs 680 crore Shivpuri-Dewas project). We estimate for FY14 with EBITDAM at 14 per cent (compared to historic 16-18 per cent when execution was smooth).