KNR Construction Remains Nirmal Bang's Top Buy Ahead Of Q4 Results In Construction Sector — Here's Why

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Nirmal Bang Report

During the first nine months of FY25, the government prioritized road maintenance and complex projects, slowing down the pace of new highway development. According to the Ministry of Road Transport and Highways, highway construction declined by 5.8% to 5,853 km 9M FY25, down from 6,216 km the previous year. The rate of government awards for the construction of new roadways slowed, totaling 3,100 km over the year, compared to 3,111 km the previous year.

While highway construction and awards were slow in FY25, the roads ministry maintained its capital investment pace to ensure that more projects get started and completed by Q4 FY25. In FY25, the roads ministry incurred around Rs.2.25 trillion in capital expenditure, accounting for 82.7% of the budgetary capex allocation of Rs. 2.72 trillion.

Top buy: KNR Constructions

The company's order book as of December 31, 2024, was recorded at Rs 38.8 billion (1.0x trailing twelve months revenue). The company seeks to establish an order book between Rs 80 to 100 billion, concentrating on endeavors in Rajasthan irrigation, Madhya Pradesh irrigation, the MSRDC project, and a multitude of projects throughout Tamil Nadu, Andhra Pradesh, Telangana, and Karnataka.

The margins are projected to fall within the 15-16% range, with the potential for enhancement as contributions from irrigation projects increase.

The company intends to concentrate on obtaining EPC and BOT projects via strategic alliances. An MoU has already been executed with NCC concerning the Bhubaneshwar metro and irrigation initiatives.

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