Detailed Narrative
Q1 FY26 Performance Overview and Revised Outlook
KNR Constructions reported a challenging Q1 FY26 with consolidated revenue declining to INR613 crores from INR985 crores in Q1 FY25, a -37.8% YoY decrease. Stand-alone revenue was INR483 crores, with EBITDA at INR66 crores and Net Profit at INR51 crores. Management attributed the muted performance to most existing projects being over 90% complete and new projects having just commenced. Consequently, the full-year FY26 stand-alone revenue guidance was revised downwards to INR2,000-2,500 crores from the previous INR2,500-3,000 crores, reflecting delays in new order inflows and project gestation periods.
Order Book and Strategic Diversification
As of June 30, 2025, the company's total order book stood at INR8,305 crores, providing revenue visibility for 1.5 to 2 years. This is diversified with 43% from mining, 27% from road projects, 17% from irrigation, and 13% from pipeline projects. A significant new win was the INR4,800 crore (excluding GST) Banhardih coal mine block project from NTPC, marking a strategic entry into the mining segment. The company aims for an additional order inflow of INR10,000-12,000 crores by the end of FY26, excluding the mining project, targeting opportunities across various infrastructure sectors.
Working Capital and Receivables Challenge
A key concern highlighted was the significant increase in stand-alone working capital days, which rose from 93 days in March 2025 to 169 days in June 2025. This deterioration is primarily due to substantial pending receivables from state governments, totaling approximately INR1,300 crores. Of this, INR800 crores is certified and expected to be released by March 2026, following recent positive discussions with the Telangana government. The company received only INR14 crores in Q1 FY26, exacerbating the working capital strain.
HAM Project Progress and NHAI Suspension Update
Physical progress on HAM projects as of June 30, 2025, shows Ramanattukara to Valanchery at ~99% and Valanchery to Kappirikkad at ~98%. The company has invested INR676 crores out of a revised equity requirement of INR990 crores for HAM projects, with an additional INR314 crores to be infused over FY26 and FY27. Regarding the NHAI show-cause notice and one-month bidding suspension, the Delhi High Court ruled on July 21, 2025, that the suspension period had concluded and should not be treated as a disqualification, allowing KNR to participate in future bids.
Mining and Water Pipeline Project Outlook
The newly awarded INR4,800 crore mining project is expected to contribute approximately INR90 crores in revenue in FY26, with a ramp-up to INR700 crores per annum thereafter. Initial capex for mining will be minimal in FY26, utilizing existing assets, but INR300-400 crores is anticipated for FY27 for heavy machinery. For the water pipeline projects, the company targets INR500 crores in revenue by March 2026, with the balance to be completed by November 2027. While INR200 crores of work was executed in Q1, it remains unbilled due to milestone-based payment structures.
EBITDA Margin Sustainability
Management guided for a stand-alone EBITDA margin of 13-13.5% for FY26. They acknowledged that margins from the new mining project are 'a little less,' potentially impacting blended margins by 1-2%. However, they expressed confidence that the overall 13-14% blended EBITDA margin could be maintained if the company secures and executes more orders in the coming quarters, which would help dilute manpower and assessment expenditures and offset the lower-margin mining work.