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Target: ₹375
CMP: ₹313.20
KNR Constructions (KNR) reported strong earnings, which beat estimates driven by strong execution/margins. Recurring PAT grew 2.3 per cent y-o-y to ₹79.40 crore (estimate: ₹59 crore).
Reported PAT grew 30 per cent y-o-y to ₹100 crore as it includes gain of ₹21.40 crore on transfer of 49 per cent stake in 2 HAMs to Cube. Irrigation receivables have reduced from ₹700 crore in Nov-21 to ₹590 crore currently led by recoveries of Rs 380 crore during the period.
Despite muted order wins of Rs 1,070 crore in YTD, order backlog is robust at ₹10,800 crore (3.4x TTM revenue). Also, about 93 per cent of the backlog is under execution giving comfort over execution ramp-up in FY23/24.
Entire order backlog should be available for execution by Apr-22 (93 per cent currently) with receipt of AD for Chitoor-Thatchur HAM, leading to strong scale up in revenue to ₹4,260 crore/₹5,200 crore in FY23/24 from ₹2,700 crore in FY21.
KNR has received PCODs for 3 HAMs (2 in May-21 and 1 in Oct-21) and expects to complete full monetisation of these assets by June-22. Equity investment in these assets at fully invested stage will be ₹385 crore against agreed consideration of ₹450 crore (1.2x P/B; received ₹245 crore till Dec-21 upon partial monetisation).
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