KNR Constructions Gets ‘Buy’ Call From IDBI Capital Despite Execution Woes In Q1 — Check Target Price

KNR's Q1 FY26 witnessed a 38% YoY decline in consolidated revenue and a 45% drop in standalone revenues due to legacy project completions and delayed new project ramp-up. Q1 FY26 standalone Ebitda collapsed 66% YoY while margins compressed to 13.6%; however, consolidated Ebitda margin came in strong at 29.9%, reflecting skewed segment mix.

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IDBI Capital Report

IDBI Capital upgraded KNR Constructions from Hold to Buy with a revised target price of Rs 244 (from CMP Rs 202), indicating a potential 21% price appreciation, primarily due to strong margin performance, order book visibility, and upcoming HAM monetisation.

The Q1 FY26 topline fell sharply as KNR transitioned between project cycles; standalone revenue fell 45% YoY to Rs 5 billion, and consolidated revenue dropped 38% to Rs 6 billion, indicating execution delays across key segments.

Despite topline weakness, the consolidated margin of 29.9% was surprisingly strong, aided by high-margin JV/associate contributions; however, core standalone margin was significantly lower at 13.6%.

The financial stress is evident in the working capital cycle, which stretched dramatically from 93 days to 169 days QoQ on account of Telangana irrigation dues; collections of Rs 12 billion are expected by March 2026 based on government assurances.

Revenue guidance for FY26 has been lowered due to delayed project starts and weather-related disruptions — from original Rs 25–30 billion to Rs 20–25 billion, highlighting limited short-term execution visibility.

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