KNR Constructions rallies 7% as board set to consider bonus issue

Shares of KNR Constructions rose 7 per cent to Rs 318 on the BSE on Tuesday after the company said its board will meet on Friday, December 18, 2020, to consider a maiden bonus share. The stock of the construction & engineering company hit a 52-week high of Rs 319.85, on December 4.

“The meeting of the board of directors of the Company is scheduled to meet on Friday the 18th day of December 2020 at 12:30 P.M at Hyderabad inter alia to consider declaration of bonus shares and other related issues,” KNR Constructions said in a BSE filing.

In the past month, the stock has outperformed the market by surging 23 per cent, as compared to 6 per cent rise in the S&P BSE Sensex.

For the July-September quarter (Q2FY21), KNR Construction outperformed in terms of execution by reporting revenue 15 per cent above analyst estimates. EBITDA (earnings before interest, taxes, depreciation, and amortization) margin remained strong on account of the rising share of higher margin irrigation projects (23 per cent of total revenue in Q2FY21), resulting in a strong beat on earnings. Order book stood strong at Rs 8,550 crore, implying OB/revenue at 3.7x and providing healthy revenue visibility, Motilal Oswal Securities said in result update.

The brokerage firm said, the working capital cycle witnessed marginal deterioration on account of pending dues from the Telangana government. Receivables from the Telangana government currently stand at Rs 740 crore.

In spite of a recent increase in receivables, the brokerage firm believes KNR Constructions strong balance sheet gives it a key competitive advantage v/s peers: a) in bidding for newer projects, and b) in terms of strong execution despite financing challenges in the sector as the dependency on bank financing is minimal.