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Motilal Oswal Report
KNR Construction Ltd. has completed the sale of the Walayar road project to Cube Highways at an enterprise of Rs 5.1 billion.
Debt on the project stands at Rs 1.3 billion. Thus, the deal’s equity is estimated to be approximately Rs 3.8 billion or P/Inv of approximately 1 time.
While this is almost in line with the announced deal in January 2020, part of the proceeds is subject to the fulfillment of certain conditions.
In lieu of an equity of Rs 3.8 billion, the company is likely to immediately realize a payment of Rs 3.1 billion, while the remaining Rs 0.7 billion would flow in over the next two years.
Further National Highways Authority of India claims and other governmental instrumentalities amount to Rs 1.7 billion – a pass-through to KNR Construction as and when realized.
We are yet to factor in any arbitration proceeds in our model. Any such realization could further boost the balance sheet.
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