KNR Construct.

KNR Constructions reported a consolidated revenue of INR 646 crores for Q2 FY26, with an EBITDA of INR 192 crores, translating to a margin of 29.8%. The net profit for the quarter stood at INR 105 crores. For the first half of FY26, consolidated revenue was INR 1,259 crores, with an EBITDA of INR 375 crores (29.8% margin) and a net profit of INR 228 crores. Standalone performance for Q2 FY26 saw revenue at INR 493 crores and a lower EBITDA margin of 10.9%, impacted by a one-off^📎 variable pay of INR 10 crores to directors and expenditures for the Kerala project.

As of September 30, 2025, the company's total order book was INR 8,748 crores, with 29% from road projects, 18% from irrigation, 12% from pipeline, and 41% from mining. Management aims for an order inflow of INR 8,000-10,000 crores by the end of FY26, comprising NHAI, irrigation, and state government projects. However, they acknowledged a 'worst time ever faced' for order inflows due to NHAI's silence period and PMO sanction issues, expecting revenues to be 'down coming 3 to 4 quarters.'

The company's HAM projects are nearing completion, with Ramanattukara to Valanchery at 99% and Valanchery to Kappirikkad at 98% physical progress as of September 30, 2025. KNR Ramanattukara Infra Private Limited received a provisional completion certificate on July 18, 2025, after agreeing to construct a viaduct at its own cost by February 20, 2026. The Kushalnagara Package 5 HAM project faces delays due to local demands for service roads, with land acquisition stalled at 85-88% for an 8-8.5 km stretch.

KNR Constructions has significant outstanding irrigation receivables, totaling around INR 758 crores out of INR 1,090 crores in total debtors. Specifically, INR 670 crores for the Kaleshwaram Package 4 project are certified but unpaid. Management is in discussions with government officials and expects payment release, with some payments for Package 3 already received post-September 2025. Most irrigation work is expected to be completed this year, with some spillover into next year for Package 3.

The mining project, valued at INR 3,500 crores, is in a 12-month development phase, primarily focused on land acquisition and clearances. The company expects to execute approximately INR 90 crores of work in the next year during this development period. Upon commencement of operations, the initial revenue is projected to be around INR 300-400 crores, eventually scaling up to INR 3,500 crores over a five-year operation period.

The industry experienced sluggishness in project awarding and execution in H1 FY26 due to monsoon and NHAI delays. However, management anticipates a clear pickup in H2 FY26, supported by government focus on infrastructure, including 25 new greenfield expressways and INR 1 trillion investment in religious tourism road links. NHAI's tightening of RFP provisions to favor contractors with proven technical and financial strength is seen as an encouraging development. The full-year NHAI awarding target is around 3,000 kilometers.

The company has invested INR 698 crores out of the INR 991 crores revised equity requirement for its 8 HAM projects, with an additional INR 292 crores to be infused in FY26 and FY27. Consolidated debt increased to INR 2,338 crores as of September 30, 2025, from INR 1,865 crores in March 2025, resulting in a net debt to equity ratio of 0.49x (up from 0.41x). Capex for the first six months was only INR 3 crores, with an additional INR 30-40 crores planned for the balance of FY26. The company is also in advanced stages of monetizing four assets, with a deal expected to close by month-end.