KNR Constructions: Making inroads

 

The stock of KNR Constructions rose by an impressive 20 per cent last week, on the back of strong order wins. The company managed to win two contracts totalling about ₹1,055 crore from the NHAI and Karnataka Road Development Corporation. One of them is a hybrid annuity model deal worth ₹920 crore, indicating that the company has been able to make inroads into such projects as well; it is usually focussed on EPC contracts.

The order book before this deal was an impressive ₹5,500 crore. Last month, CRISIL upgraded KNR’s long-term loan facility to AA- from A+, suggesting improving operational performance and a reasonable working-capital cycle. The company’s third quarter results were reasonable. Given the weak sentiment associated with the highway construction in recent quarters, the steady order wins gave the market a reason to lift the stock. Even after this rally, the stock of KNR trades at an inexpensive 14 times trailing earnings.

 

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