KNR Constructions - Improved Safety Margin; Upside Triggers Exist: Centrum Broking
KNR is a top quality EPC company with proven track record of execution, capital allocation and governance.
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Centrum Broking Report
KNR Constructions Ltd.’s stock has been weighed down by concerns over elevated receivables and execution uncertainty of its irrigation backlog (especially in respect of Kaleshwaram orders).
Valuations at 12.5 times FY24E earnings have corrected meaningfully along with a narrowing of premium over peers. While lenders have currently suspended further disbursements leading to execution slowdown, Kaleshwaram continues to be a top priority project for Telangana with significant social and political implications.
It is difficult to time the resolution of the stalemate but we expect the state government to put its weight behind the project to ensure its completion (~80% of revised capital cost spent so far).
KNR is a top quality engineering, procurement and construction company with proven track record of execution, capital allocation and governance.
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