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LORD JESUS CHRIST SAYS

The thief comes only to steal and kill and destroy; I have come that they may have life, and have it to the full. “I am the good shepherd. The good shepherd lays down his life for the sheep.

15 Feb 2019

SHARE MARKET--Buy KNR Construction; target of Rs 260: Motilal Oswal


Motilal Oswal is bullish on KNR Construction has recommended buy rating on the stock with a target price of Rs 260 in its research report dated February 13, 2019.
    

Revenues stood at INR4.5b (+3.6% YoY), in line with our estimate of INR4.4b, led by timely execution of the KP Sagar Irrigation project (INR960m revenue contribution; 20% of 3QFY19 sales), Hubli (INR600m), Madurai (INR400m), Trivandrum (INR520m) and Yedulla (INR410m). EBIDTA at INR901m (- 8% YoY) was ahead of our estimate of INR740m. Operating margins declined 260bp YoY to 20%, but was ahead of our estimate of 17.0%. Better-than-estimated margins were due to the better revenue mix (20% revenue contribution from KP Sagar Irrigation project, where margins are in excess of 20%+). PAT declined 21% YoY to INR521m, exceeding our estimate of INR339m.

Outlook

We maintain our Buy rating, with target price of INR260 and value KNRC on SOTP basis - INR216/share for standalone EPC business (15x FY20E EPS of INR16.9), and INR43/share for investments in the BOT projects, annuity projects and land parcels (1x book value).

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