SBICAP Securities maintains buy on KNR Contractions, target price Rs 337

SBICAP Securities has maintained its buy rating on KNR Contractions in the long term with a target price of Rs 337. Shares of KNR ended at Rs 276.70 on Friday while the BSE Sensex closed 202.05 points down (-0.49%) at 41,257.74.


Company Financials

For the quarter ended 31-12-2019, the company has reported a Consolidated sales of Rs 603.75 Crore, up 2.84 % from last quarter Sales of Rs 587.07 Crore and up 24.78 % from last year same quarter Sales of Rs 483.85 Crore Company has reported net profit after tax of Rs 49.96 Crore in latest quarter.

The company’s top management includes Mr.B V Rama Rao, Mr.K Jalandhar Reddy, Mr.K Narasimha Reddy, Mr.L B Reddy, Mrs.K Yashoda. Company has K P Rao & Co. as its auditors As on 31-12-2019, the company has a total of 140,617,300 shares outstanding.

Investment Rationale

The rating is based on 14 times FY22 estimated EPC business (Rs 284) and Rs 53 from BOT/HAM business. KNR’s continues to maintain healthy working capital and debt/equity, backed by a strong balance sheet. Current order book will support growth going into FY21 but the high gestation highway project order need to be converted at the earliest to improve growth outlook for FY22.