KNR Constructions Limited — Q2 FY26 earnings call

Call held 20 Nov 2025

Management summary

KNR Constructions reported a consolidated revenue of INR 646 crores for Q2 FY26, with an EBITDA margin of 29.8% and a net profit of INR 105 crores. The company's order book stood at INR 8,748 crores as of September 30, 2025, with a target to secure INR 8,000-10,000 crores in new orders by FY26 end. Management acknowledged a challenging period for order inflows and execution, citing monsoon impacts and NHAI delays, but anticipates a pickup in H2 FY26 with a revenue guidance of INR 800-900 crores.

Highlights

  • Q2 FY26 Consolidated Revenue: INR 646 crores

  • Q2 FY26 Consolidated EBITDA: INR 192 crores, with a margin of 29.8%

  • Q2 FY26 Consolidated Net Profit: INR 105 crores

  • Total Order Book (as of Sep 30, 2025): INR 8,748 crores

  • Target Order Inflow for FY26: INR 8,000 crores to INR 10,000 crores

  • Consolidated Net Debt (as of Sep 30, 2025): INR 2,338 crores

  • Net Debt to Equity (consolidated, as of Sep 30, 2025): 0.49x

  • H2 FY26 Revenue Guidance: INR 800-900 crores

Concerns

  • Sluggish Project Awarding Activity

  • Land Acquisition Delays

  • Significant Irrigation Project Receivables

Key financials

  1. Consolidated Revenue ₹646 Cr
  2. Consolidated EBITDA ₹192 Cr
  3. Consolidated EBITDA Margin 29.8%
  4. Consolidated PAT ₹105 Cr
  5. Order Book ₹8,748 Cr
  6. Consolidated Debt ₹2,338 Cr
  7. Net Debt to Equity 0.49×

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

  • Order Book Bifurcation
    29% Road Projects18% Irrigation Projects12% Pipeline Project41% Mining Project
  • Q2 FY26 Segmental Revenue
    29% HAM34% EPC Roadwork36% Irrigation1% Back-to-back

Guidance & targets

Order Inflow

  • Total Order Inflow Order Inflow · by end of FY '26 · Medium confidence INR8,000 crores to INR10,000 crores
    we anticipate new orders award in the coming quarter, where we aim at order inflow of approximately INR8,000 crores to INR10,000 crores by end of FY '26 with the mix of NHAI project, irrigation projects and other state government projects.

    — K. Venkata Ram Rao

  • Bhandara-Gadchiroli LOA Order Inflow · Q4 · Medium confidence Q4
    So LOA may come in Q4. Yes, sir.

    — K. Jalandhar Reddy

Revenue

  • Total Revenue Revenue · second half of this year · Medium confidence INR800 crores to INR900 crores
    INR800 crores to INR900 crores will be there in this second half of this year, that will be there.

    — K. Jalandhar Reddy

  • Pipeline Project Revenue Certification Revenue · this quarter · High confidence INR150 crores to INR200 crores
    So in this quarter,, we are expecting that around INR150 crores to INR200 crores certification is going to happen.

    — K. Venkata Ram Rao

  • Pipeline Project Revenue Revenue · entire year · Medium confidence around INR300 crores to INR350 crores
    In a total cannot, means this will be there and next quarter you can consider around INR300 crores to INR350 crores. For the entire year? For the entire year, yes.

    — K. Venkata Ram Rao

  • Mining Project Development Work Revenue · next 1 year · Medium confidence around INR90 crores
    So in next 1 year, we may do maximum work of around INR90 crores.

    — K. Venkata Ram Rao

  • Mining Project Operation Period Revenue Revenue · initially · Medium confidence INR300 crores to INR400 crores
    so initially, it will be around INR300 crores to INR400 crores.

    — K. Venkata Ram Rao

  • Mysore Projects Revenue Revenue · second half · Medium confidence around INR300 crores
    In the second half, we are looking around INR300 crores, you can say revenue in the second half for these 2 project out of INR1,200 crores.

    — K. Venkata Ram Rao

  • Mysore Projects Revenue Revenue · next year · Medium confidence around INR600 crores to INR700 crores
    And the next year will be somewhere around INR600 crores to INR700 crores.

    — K. Venkata Ram Rao

  • Irrigation Unbilled Revenue Booking Revenue · second half · Medium confidence around INR300 crores to INR350 crores
    You can say around INR300 crores to INR350 crores actually, we are going to book in the second half and balance will be next year.

    — K. Venkata Ram Rao

  • Irrigation Unbilled Revenue Booking Revenue · next year · Medium confidence around INR600 crores to INR700 crores
    And the balance maybe around INR600 crores to INR700 crores, that entirely most likely will be over in FY '27, that project pipeline?

    — K. Venkata Ram Rao

Profitability

  • EBITDA Margin Profitability · future projects · Medium confidence 13% to 14%
    margin broadly will be doing the similar 13% because till now, it is lower because of the low execution, but broader level 13% to 14% margin is doable, EBITDA margin? Yes, yes, that whatever new which we are aiming in that way only. We'll definitely try our best in that.

    — K. Jalandhar Reddy

Sector Outlook

  • NHAI Kilometers Awarded Sector Outlook · Full year · Medium confidence 3,000 kilometers
    Full year target is around 3,000 kilometers that we got to know.

    — K. Venkata Ram Rao

Capex

  • Capital Expenditure Capex · balance 6 months · High confidence around INR30 crores to INR40 crores
    So maybe you can say maximum around INR30 crores to INR40 crores will be capex there for balance 6 months.

    — K. Venkata Ram Rao

Risks & concerns

  • Sluggish Project Awarding Activity

    high

    MoRTH and NHAI project awarding activity has been relatively slow, impacting order book conversion.

    Management acknowledged

  • Land Acquisition Delays

    high

    Mining project and Kushalnagara HAM project are facing delays due to land acquisition issues and local demands for service roads.

    Management acknowledged

  • Significant Irrigation Project Receivables

    high

    Around INR758 crores in irrigation receivables (out of INR1,090 crores total debtors) are outstanding, with INR670 crores for Package 4 certified but not yet paid.

    Management acknowledged

  • Execution Delays due to Monsoon

    medium

    Execution activities were muted during the quarter due to extended monsoon conditions across several parts of the country.

    Management acknowledged

  • State Government Payment Risks

    medium

    State government projects carry inherent risks with payments, which is a constant consideration.

    Management acknowledged

Areas of evasion (1)

  • Exact timeline for resolution and payment of irrigation receivables.

Q&A highlights

2 direct
Order Inflow and Revenue Outlook Direct
Right now, it is quite difficult to say anything, sir. But however, I'll try to answer it this way, that INR800 crores to INR900 crores will be there in this second half of this year, that will be there. And upcoming, I think we are expecting good order inflow to come.

Addresses the critical investor concern about future revenue visibility given the current low order book and slow execution pace.

Asked by Shravan Shah

Margins and Weak Inflow Pipeline Direct
Actually, on that basically, for this employee cost, actually this INR10 crores, that's variable pay as the director has been provided because it has been approved in our AGM and by the Board. So that is, you can say, one item this has in this quarter. And we have incurred some of the expenditures for our Ramanattukara, Kerala project also around due to that, actually the margin was lower actually in this quarter.

Explains the lower margins in Q2 FY26 due to specific one-off costs and project-related expenditures, and acknowledges the weak inflow period.

Asked by Parikshit Kandpal

Irrigation Project Receivables and HAM Project Land Acquisition Partial
Sir, out of INR1,090 crores for debtors, this irrigation receivables are around INR758 crores and HAM receivables is INR258 crores. So this irrigation receivables unbilled is around INR720 crores. So this is a work what we did, and it has to be certified by the department. So as of our status is that, still because we have to complete the project. So that is our first priority.

Highlights significant working capital tied up in receivables from irrigation projects and ongoing land acquisition challenges affecting HAM project execution.

Asked by Nitin Ranjit

3 min read 7 chapters

Detailed narrative

Q2 FY26 Financial Performance Overview

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.

Order Book and Inflow Outlook

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.'

HAM Project Progress and Challenges

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.

Irrigation Project Receivables and Execution

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.

Mining Project Development

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.

Sector Outlook and NHAI Initiatives

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.

Capital Allocation and Debt Position

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.

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