Reliance Securities: KNR Construction - A Quality Pick In Infra EPC Space
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Reliance Securities Report
KNR Construction Ltd. is one of the best managed road engineering procurement construction players in India with a strong track record in timely and successful execution of projects across 12 states in India, which helped the company secure repeat orders on a continuous basis.
A strong (over 14% compound annual growth rate) return for the shareholders since listing in 2008 vindicates KNR Construction’s execution expertise and management capabilities over the years.
While the company is yet to diversify from roads and highways, and irrigation space, strong expertise in core areas helped its order book clock 11% CAGR over last ten years.
The company has been witnessing higher order inflow for last two years. It secured two irrigation projects worth Rs 23 billion in Q1 FY21, which took its total order backlog to Rs 72 billion as on June 2020 (3.2 times of trailing twelve months revenue).
KNR Construction is the one the first companies to sign share purchase agreement with Cube Highways for three hybrid annuity model projects, which will help the company release equity from these projects.
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