KNR Construction Q3 Review — Muted Performance Expected In The Next Two Quarters, Nirmal Bang Maintains 'Buy'

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Nirmal Bang Report

KNR Construction Ltd.'s revenue, Ebitda, and PAT have been forecasted for FY25/26/27 at Rs 36 billion, Rs 37 billion, and Rs 40 billion; Rs 6.1 billion, Rs. 6.6 billion, and Rs 7.5 billion; and Rs 8.1 billion, Rs 6.1 billion, and Rs 6.8 billion, respectively, consistent with management guidance. The PAT is projected to be comparatively higher due to anticipated dues in the forthcoming quarters.

The stock has reached our target price and has experienced a correction of 41% from its 52week high of Rs 415. The multiple has been adjusted from 15x to 13x to account for the transition to an EPC business model.

Our outlook for the construction and infrastructure sector is optimistic, and we uphold our "Buy" rating on KNR, assigning a valuation of 13xFY26E EPS and 0.7x the P/B for built-operate-transfer/hybrid annuity model projects.

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