New contract for KNR Constructions in Telangana boosts investor confidence

The company has a strong order book and its revenue visibility gets further strengthened with the new LOA. The order book of the company at the end of the June quarter is almost ₹11,700 crore has already provided revenue visibility for four years. In addition, the company was targeting ₹2,000 crore- ₹According to analysts at HDFC Securities Ltd, the order flow for the remaining 9MFY22 with 1-2 HAM (Hybrid Annuity Model) projects worth Rs 3,000 crore. It was eyeing incremental irrigation projects from Karnataka and is expected to continue selecting new irrigation project bids. Telangana. Analysts at Motilal Oswal Financial Services Limited (MoFSL) had raised their order inflow sentiment ₹5,000 crore to ₹7,000 crore for FY22.

The company has also been impressed with its quarterly performance. Revenue was up 54% year-over-year and well ahead of analyst estimates. Analysts at MOFSL had said that the reported revenue was ahead of their estimates by 23%. The Ebitda margin at 19.4% also beat expectations of around 18%. The performance indicated that the project execution has accelerated. This was primarily driven by HAM projects with average operating efficiency in the range of 95% according to analysts. Unlike the previous year, which saw the heavy impact of the lockdown, the company did not see any major reduction in the workforce, and project execution was progressing well.

Overall, analysts maintain a positive outlook on KNR and earnings estimates are being revised upwards. Backed by such a strong order book, MOFSL expected KNR to grow revenue and earnings at a CAGR of 24% and 33% respectively in FY21-24.