KNR Constructions Ltd - BUY

KNR Constructions Ltd - BUY
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CMP (Rs) Target (Rs)
230 289
Upside (%) Tenure
26 12-Months

KNR Constructions (KNR), an established road contractor, is poised to register 20.4% revenue CAGR over FY19-21E led by (a) robust order book (~2.8x FY19 revenue), (b) strong execution skills, (c) healthy balance sheet (Q1FY20 standalone Debt/Equity ratio of ~0.2x), and (d) likely strong order inflows led by Bharatmala and irrigation projects.

KNR is in a sweet spot to secure selective high margin orders given its healthy order book position and balance sheet.

Our SOTP of Rs289 is based on 12x FY21E standalone EPS and Rs36/share contribution from stake in 4 BOT assets. We recommend BUY on KNR Constructions.