KNR Constructions Limited — Q1 FY26 earnings call

Call held 12 Aug 2025

Management summary

KNR Constructions reported a muted Q1 FY26 performance with significant revenue decline, primarily due to most existing projects nearing completion and new projects just commencing. The company secured a substantial INR4,800 crore mining project, bolstering its order book to INR8,305 crores. However, full-year revenue guidance was revised downwards, reflecting delays in new order inflows and project gestation periods. A notable concern was the sharp increase in working capital days, driven by large pending receivables from state governments.

Highlights

  • Q1 FY26 Consolidated Revenue declined to INR613 crores from INR985 crores in Q1 FY25, a -37.8% YoY decrease.

  • Q1 FY26 Stand-alone Revenue was INR483 crores, with EBITDA at INR66 crores and Net Profit at INR51 crores.

  • Consolidated EBITDA Margin for Q1 FY26 stood at 29.9%.

  • Total Order Book as of June 30, 2025, reached INR8,305 crores, with 43% from mining projects.

  • Secured a new INR4,800 crore (excluding GST) mining project from NTPC.

  • FY26 Stand-alone Revenue Guidance revised downwards to INR2,000-2,500 crores from INR2,500-3,000 crores.

  • Working Capital Days significantly increased to 169 days in Q1 FY26 from 93 days in March 2025.

  • INR1,300 crores in receivables are pending from state governments, with INR800 crores certified for release by March 2026.

Concerns

  • Muted ordering activity in the road sector and delays in new order awards

  • Significant increase in working capital days and pending receivables from state governments

Key financials

  1. Consolidated Revenue ₹613 Cr -37.8%YoY
  2. Consolidated EBITDA Margin 29.9%
  3. Stand-alone Net Profit ₹51 Cr -61.9%YoY
  4. Total Order Book ₹8,305 Cr
  5. Working Capital Days 169 days
  6. Consolidated Debt ₹2,018 Cr +9.2%QoQ

What they filed

Q1 FY27: revenue down 9.5%, net profit up 452.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue884 743 851 483 493 −44%585 −21%535 −37%437 −10%
EBITDA165 152 118 66 54 −67%31 −80%28 −76%66 +0%
Net profit334 182 75 51 28 −92%18 −90%19 −75%282 +453%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Q1 FY26 Revenue Breakup
    58% HAM Road Project6% Irrigation31% EPC Road Project5% Back-to-back Projects

Guidance & targets

Order Inflow

  • Order Inflow Target (excluding mining) Order Inflow · FY26 · Medium confidence INR10,000-12,000 crores
    We hereby aim at order inflow of approximately INR10,000 crores to INR12,000 crores by the end of FY'26. It's a mix of NHAI projects, irrigation project, mining projects and other state government projects.

    — K. Venkata Ram Rao, General Manager, Finance and Accounts

Revenue

  • Stand-alone Revenue Revenue · FY26 · Medium confidence INR2,000-2,500 crores

    Previously INR2,500-3,000 crores → INR2,000-2,500 crores

    I think up to this March, I think we'll be able to do around say... INR2,000 to INR2,500 crore we are taking on it.

    — K. Jalandhar Reddy, Executive Director

  • Mining Project Revenue Revenue · FY26 · High confidence ~INR90 crores
    So this year, actually that means after commencement, within one year, we can only spend about INR90 crores.

    — K. Jalandhar Reddy, Executive Director

  • Mining Project Revenue (per annum) Revenue · post FY26 · High confidence ~INR700 crores
    And later we should go by INR700 crores per annum kind of thing.

    — K. Jalandhar Reddy, Executive Director

  • Water Pipeline Project Revenue Revenue · by March (FY26) · Medium confidence ~INR500 crores
    So actually, if everything is in track, I think INR1,200 crores should come in our hand. But if the cuts are there because of the land acquisition.

    — K. Jalandhar Reddy, Executive Director

  • Water Pipeline Project Revenue (balance) Revenue · by November next year (FY27) · High confidence balance
    And balance we need to complete within November next year.

    — K. Jalandhar Reddy, Executive Director

Profitability

  • Stand-alone EBITDA Margin Profitability · FY26 · Medium confidence 13-13.5%
    EBITDA will be somewhere around 13% to 13.5%.

    — K. Venkata Ram Rao, General Manager, Finance and Accounts

Capex

  • Mining Project Capex Capex · FY27 · Medium confidence INR300-400 crores
    Next year some mining project actually will be required INR300 crores to INR400 crores.

    — K. Venkata Ram Rao, General Manager, Finance and Accounts

  • Company Capex (maximum) Capex · FY26 · High confidence INR100 crores
    Entire year may be maximum INR100 crores.

    — K. Venkata Ram Rao, General Manager, Finance and Accounts

Receivables

  • Telangana Irrigation Receivables (certified) Receivables · by March (FY26) · High confidence INR800 crores
    Out of that INR800 crores is certified itself. So INR800 crores once this issue is sorted out INR800 crores, they will immediately release.

    — K. Venkata Ram Rao, General Manager, Finance and Accounts

Bid Pipeline

  • Total Bid Pipeline (across sectors) Bid Pipeline · by March end (FY26) · Medium confidence INR80,000-90,000 crores
    So definitely, maybe nearly around INR80,000 crores to INR90,000 crores definitely we will try to bid it.

    — K. Venkata Ram Rao, General Manager, Finance and Accounts

Risks & concerns

  • Muted ordering activity in the road sector and delays in new order awards

    high

    NHAI awarded only 166 km in Q1 FY26. Company couldn't achieve L1 status in many bids due to aggressive market.

    Management acknowledged

  • Significant increase in working capital days and pending receivables from state governments

    high

    Working capital days increased from 93 days (March '25) to 169 days (June '25) due to INR1,300 crores pending with state government.

    Management acknowledged

  • Potential for lower blended EBITDA margins due to new mining projects

    medium

    Management indicated margins could be '1% or 2% lower' due to mining projects but hopes to maintain levels with new order inflows.

    Management acknowledged

  • Land acquisition and regulatory approval delays impacting project commencement

    medium

    Delays in MSRDC LOA and general project awards are due to land acquisition and cabinet approvals.

    Management acknowledged

Areas of evasion (2)

  • Specific details on HAM monetization proceeds
  • Exact net working capital cycle for mining project

Q&A highlights

2 direct
Muted Q1 execution and revised FY26 revenue guidance Direct
Definitely actually this quarter, the revenue has muted. The reason is being that actually whatever the existing order book is there. So, except four projects, other projects is almost over 90% has been completed... I think up to this March, I think we'll be able to do around say... INR2,000 to INR2,500 crore we are taking on it.

Directly addresses the significant revenue decline and provides a revised, lower full-year outlook, highlighting execution challenges and delays in new order commencement.

Asked by Alok

Significant increase in working capital days and pending government receivables Direct
Basically, out of debtors, actually, irrigation is around INR800 crores is irrigation actually and INR1,200 crores HAM project is there out of INR1,200 crores of debtors. And irrigation is still with unbilled and everything is still around INR1,300 crores pending with the state government.

Explains the sharp deterioration in working capital, a critical metric for construction companies, attributing it to large pending payments from state governments, which is a significant risk.

Asked by Alok

Sustainability of EBITDA margins with new mining projects and overall blended margins Partial
Yes, 1% or 2% lower, we can think of it, as it's very early to say anything on that as a new project with us... But however margins are a little less in mining. You also know that... Main thing is that we are thinking it should be doable because we are expecting some more orders to add in this coming quarter.

Reveals potential pressure on blended EBITDA margins due to lower-margin mining projects and links margin sustainability to securing and executing more orders, indicating uncertainty.

Asked by Shravan Shah

3 min read 6 chapters

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.

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