No. of equity shares – 2,81,23,460
Face Value – Rs. 10
Promoter holding – 72.78%
General Public holding – 7.36%
Book Value – Rs. 77
Reserves – Rs. 198 Cr
Total Debt / equity – 0.72
52 week high/low – Rs. 88/Rs. 21
KNR Constructions Limited is into roads construction and irrigations. They have a strong presence in Andhra Pradesh and also have got projects from NHAI. They have interest in two build-operate-transfer (BOT) road projects in which they have 40% interest in each along with Patel Engineering which has 60% stake and those two BOT projects will go on stream in the next three months and another one in next 8-9 moths. The contract for the construction is given to them.
The total order book with them is close to Rs 1,500 Cr and recently they have been awarded Rs 500 Cr Coal India order, plus they will be getting another order of Rs 250 Cr. A letter of intent will get issued to them maybe in a week or so which will take them to a total order book of close to Rs 2,000 Cr which can easily take care of their next two year execution capabilities and if you see their net profit margin, it is close to 6.75% while the profit before tax (PBT) is close to 10% which is slightly above the industry norms because industry norms of about 5-6% & 8-9% respectively.
And now we see with the new state government coming into the power in Andhra Pradesh, their thrust will be more on the road and irrigation projects in which this company has the specialty. The company has its revenues divided as 80-82% in the road construction while about 15% in the irrigation & these two areas will give good order book to the company in the time to come and they will be able to consistently perform. If you see this share is also available on a historic PE of less than 5 so you have a good scope of appreciation.
Face Value – Rs. 10
Promoter holding – 72.78%
General Public holding – 7.36%
Book Value – Rs. 77
Reserves – Rs. 198 Cr
Total Debt / equity – 0.72
52 week high/low – Rs. 88/Rs. 21
KNR Constructions Limited is into roads construction and irrigations. They have a strong presence in Andhra Pradesh and also have got projects from NHAI. They have interest in two build-operate-transfer (BOT) road projects in which they have 40% interest in each along with Patel Engineering which has 60% stake and those two BOT projects will go on stream in the next three months and another one in next 8-9 moths. The contract for the construction is given to them.
The total order book with them is close to Rs 1,500 Cr and recently they have been awarded Rs 500 Cr Coal India order, plus they will be getting another order of Rs 250 Cr. A letter of intent will get issued to them maybe in a week or so which will take them to a total order book of close to Rs 2,000 Cr which can easily take care of their next two year execution capabilities and if you see their net profit margin, it is close to 6.75% while the profit before tax (PBT) is close to 10% which is slightly above the industry norms because industry norms of about 5-6% & 8-9% respectively.
And now we see with the new state government coming into the power in Andhra Pradesh, their thrust will be more on the road and irrigation projects in which this company has the specialty. The company has its revenues divided as 80-82% in the road construction while about 15% in the irrigation & these two areas will give good order book to the company in the time to come and they will be able to consistently perform. If you see this share is also available on a historic PE of less than 5 so you have a good scope of appreciation.
Even the budget-09 shows the government’s interest & support for the construction & development of road transportation. The road ahead has just got smoother for highway developers. As per the new policy to make funds available, state-owned India Infrastructure Finance Company (IIFCL) will refinance 60% of commercial bank loans for public-private projects over the next 15-18 months. The move would ease the tight liquidity in the market for road developers and speed up highway development.
The government also increased plan allocation to National Highways Development Authority (NHAI) for the national highway development programme by 23% to Rs 8,578 crore in the current financial year. Road transport and highways minister Kamal Nath has recently announced that 20 km of roads would be laid per day. The company has already got projects from NHAI to build highways around Delhi.
The concern is that road projects have failed to meet scheduled targets due to a shortage of funds, delay in land acquisition, law and order problems and default by developers. Due to the delays, there is a risk of price escalations.
KNR has posted good results for FY-09, revenues of close to Rs 650 crore (Rs. 473 Cr) & Net profit of Rs. 44 Cr ( Rs. 31 Cr), they have posted an EPS of Rs 15 for 2009 and the price right now is Rs 70, way below the book value. They came with IPO last year at Rs 160 and the share is ruling way below that. If you see this share is also available on a historic PE of less than 5 so you have a good scope of appreciation. The promoters holding at around 72% shows confidence of the promoters in the company.
Considering all the factors, downside risk looks minimal & if all the projects get through with greater efficiency, there could be good upside potential. Investors can invest in the counter with long term view to get the benefits of the boom in infrastructure developments.
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