Buy KNR Constructions for medium- to long-term investments

Firstcall India Equity | April 15, 2016, midnight


SYNOPSIS


-  KNR Constructions Limited (KNRCL) operates as an infrastructure development company in India.


-  During Q4 FY16, the company achieved a turnover of Rs. 2958.40 mn as against Rs. 2556.68 mn in Q4 FY15, an increase of 15.71%.


-  During Q4 FY16, Net profit increased by 137.64% to Rs. 579.50 mn from Rs. 243.86 mn in the corresponding quarter ending of previous year.


-  During the quarter, EBIDTA is Rs. 605.03 mn as against Rs. 401.02 mn in the corresponding period of the previous year, up by 50.87%.


-  EPS of the company stood at Rs. 20.61 during the quarter, as against Rs. 8.67 per share over previous year period.


-  EPC Order-book is Rs. 34,635 mn as on 31St March, 2016 comprising of Rs. 34,068 mn in Roads sector and Rs. 567 mn in Irrigation.


-  KNR Constructions is awarded by Chief Engineer (NHDP IV), Ministry of Road Transport Highways, New Delhi, an order worth of Rs. 4149.00 mn.


-  KNR Constructions Ltd, a premier infrastructure development company in Joint Ventures has bagged orders worth of Rs. 9836.90 mn.


-  Revenue from operation of Rs. 9025.47 mn for the year ended March 31, 2016, as against Rs. 8761.31 mn for the year ended March 31, 2015.


-  Net profit for the FY 2015-16 went up 121% to Rs. 1611.23 mn from Rs. 730.12 mn in FY2014-15.


-  Net Sales and PAT of the company are expected to grow at a CAGR of 7% and 31% over 2015 to 2018E, respectively.


OUTLOOK AND CONCLUSION


-  At the current market price of Rs.578.25, the stock P/E ratio is at 9.99 x FY17E and 9.04 x FY18E respectively.


-  Earning per share (EPS) of the company for the earnings for FY17E and FY18E is seen at Rs. 57.86 and Rs. 63.99 respectively.


-  Net Sales and PAT of the company are expected to grow at a CAGR of 7% and 31% over 2015 to 2018E, respectively.


-  On the basis of EV/EBITDA, the stock trades at 7.67 x for FY17E and 7.02 x for FY18E.


-  Price to Book Value of the stock is expected to be at 1.86 x and 1.59 x for FY17E and FY18E respectively.


-  Hence, we say that, we are Overweight in this particular scrip for Medium to Long term investment.


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