Shares of KNR Constructions, a number one supplier of engineering, procurement, and building (EPC) companies, surged 14.31% in intraday buying and selling on Wednesday, November 13 to a three-week excessive of ₹324.65 per share.
The inventory rally adopted the corporate’s sturdy efficiency within the quarter ending September. KNR reported an 87% year-on-year (YoY) enhance in consolidated income to ₹1,944.86 crore. Working revenue jumped 276% YoY to ₹869 crore from ₹231 crore, with margins bettering by 2,246 foundation factors to 44.7%.
Revenue after tax (PAT) soared 306% to ₹580 crore, up from ₹142 crore a 12 months earlier. It additionally witnessed a sequential enchancment of 249% from the June quarter, the place the online revenue stood at ₹165 crore.
As of the tip of September 2024, the corporate’s complete order e-book stood at ₹4,406 crore. The street (HAM) phase contributed 33% to the order e-book whereas the irrigation and pipeline sectors accounted for 23% and 25%, respectively, with the rest coming from different street tasks, as per the corporate’s Q2 earnings report.
KNR Constructions is a number one participant within the nation’s infrastructure sector, the place it primarily focuses on offering infrastructure companies for highways, flyovers and bridges, and irrigation sectors. It participates in all of the codecs of bids, together with merchandise price contracts, EPC contracts, BOT (toll/annuity), and HAM mode.
After three a long time of sturdy efficiency in roads and irrigation, it’s now increasing into new sectors as a result of a slowdown in venture awards in its conventional areas. The corporate is constructing experience in city infrastructure, pump storage, railways, and tunnel tasks, taking over these tasks independently or by joint ventures.
Authorities venture awards have been lacklustre for the previous 1-2 years, nonetheless, given the big infrastructure backlog, analysts anticipate the Nationwide Highways Authority of India (NHAI) to award tasks value ₹2 trillion. State governments of Andhra Pradesh, Telangana, and Tamil Nadu are arising with giant tasks on irrigation and concrete infrastructure, and L1 firms in some tasks want to subcontract work to high quality EPC companies.
This presents an enormous alternative, and administration is assured of reaching ₹60-80 billion inflows within the present fiscal.
Replenish practically 160% in final 4 years
Over the previous 4 years, the corporate’s shares have risen from ₹124.65 to the present buying and selling value of ₹320.80, delivering a achieve of 157%. Earlier in September, home brokerage agency Elara Capital retained its ‘Accumulate’ score on the inventory and revised the goal value increased to ₹336 apiece.
“A pickup in inflows and receipt of pending approvals on hybrid annuity mannequin (HAM) tasks value ₹12 billion maintain potential to return to a 15%+ development trajectory from FY26E after muted efficiency for the previous two years,” mentioned the brokerage.
