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    KNR Construct.

    KNRCONMixed
    Construction·14 Feb 2025
    Management Summary

    KNR Constructions reported strong consolidated financial performance for Q3 and 9M FY25, driven by robust EBITDA and PAT growth. The company is actively pursuing new order inflows across diverse sectors like state highways, irrigation, mining, and urban infrastructure to bolster its order book, which currently provides 1.5-2 years of revenue visibility. While facing challenges like aggressive bidding and significant receivables from the Telangana government, KNR is focused on asset monetization and strategic project selection.

    Highlights

    8

    • Consolidated Revenue for Q3 FY25 stood at INR848 crores.

    • Consolidated EBITDA for Q3 FY25 was INR256 crores, growing 13% YoY.

    • Consolidated PAT for Q3 FY25 was INR248 crores, registering an 83% YoY growth.

    • Consolidated Revenue for 9M FY25 grew 25% YoY to INR3,778 crores.

    • Consolidated EBITDA for 9M FY25 grew 109% YoY to INR1,404 crores, with a margin of 37.2%.

    • Total order book, including recent awards and HAM projects awaiting appointed dates, stands at INR5,517 crores.

    • Targeting INR8,000-10,000 crores in order inflow over the next 3-4 months.

    • Receivables from Telangana government for irrigation projects amount to INR977 crores, with INR600 crores certified.

    Concerns

    2

    • Aggressive Bidding & Market Competition

    • Telangana Government Payment Delays

    What Changed2

    vs Q4 FY25

    Tone shiftNeutral → MixedGuidance items9 → 6 (-3)
    Key financials

    Metrics

    11

    Periods

    3

    Headline

    3
    • Total Order Book
      ₹5,517 Cr
    • Consolidated Debt (Dec 2024)
      ₹1,486 Cr
    • Net Debt to Equity (Dec 2024)
      0.33 ratio

    Q3 FY25

    4
    • Consolidated Revenue
      ₹848 Cr
    • Consolidated EBITDA
      ₹256 Cr
      YoY+13%
    • Consolidated EBITDA Margin
      30.1%
    • Consolidated PAT
      ₹248 Cr
      YoY+83%

    9M FY25

    4
    • Consolidated Revenue
      ₹3,778 Cr
      YoY+25%
    • Consolidated EBITDA
      ₹1,404 Cr
      YoY+109.0%
    • Consolidated EBITDA Margin
      37.2%
    • Consolidated PAT
      ₹994 Cr
      YoY+142%

    Segment breakdown

    Order Book Bifurcation (as of Dec 31, 2024)
    46% EPC Road Projects26% Irrigation Projects28% Pipeline Projects
    Q3 FY25 Revenue Contribution
    60% HAM16% Irrigation23% Road EPC
    List

    Guidance & targets

    6
    CategoryTargetPriority
    Order Inflow
    Order Inflow Target
    INR8,000 crores to INR10,000 crores
    		Medium
    Revenue
    FY25 Revenue Growth
    10-15% degrowth
    		High
    Revenue
    FY26 Revenue Target
    INR3,500 crores to INR4,000 crores
    		Medium
    Profitability
    EBITDA Margin
    15% to 15.5%
    		Medium
    Asset Monetization
    HAM Assets Monetization
    1 asset by end of Q1, other 3 by December end
    		High
    Receivables
    Telangana Irrigation Receivables Recovery
    INR600 crores
    		Medium

    Risks & concerns

    6
    RiskSeverity

    Aggressive Bidding & Market Competition

    NHAI projects are seeing aggressive bidding (minus 20-25% for HAM, minus 40% for EPC) by smaller contractors, leading to poor quality and delays, making it difficult for established players to win. — Management acknowledged

    high

    Telangana Government Payment Delays

    INR977 crores in receivables from Telangana irrigation projects are delayed by 1-1.5 years, impacting cash flow, with the company pursuing legal action. — Management acknowledged

    high

    Land Acquisition Delays for HAM Projects

    Projects like Kushalnagar have faced delays in receiving appointed dates due to land acquisition issues, impacting project commencement. — Management acknowledged

    medium

    Anticipated Revenue Degrowth in FY25 & FY26

    Anticipating 10-15% revenue degrowth in FY25 and INR3,500-4,000 crores revenue in FY26 due to a lower order book and project execution timelines. — Management acknowledged

    medium

    Areas of Evasion(2)

    • precise margin guidance for new projects given aggressive bidding
    • exact timeline for MSRDC order

    Q&A highlights

    3

    “Sir, certified is INR577 crores for package 4 bills are certified by them actually that we have to get the money immediately. And around INR400 crores actually we did the work, but bill has yet to be certified. So put together around INR977 crores is there in that particular project.”

    Highlights a significant working capital blockage (INR977 crores) from the Telangana government, impacting cash flow and requiring legal action.

    asked by Ravi Naredi

    2 min read6 chapters

    Detailed Narrative

    01

    Q3 FY25 Consolidated Financial Performance

    KNR Constructions reported a strong Q3 FY25 with consolidated revenue of INR848 crores. Consolidated EBITDA grew 13% year-on-year to INR256 crores, achieving a margin of 30.1%. Net profit for the quarter surged 83% year-on-year to INR248 crores. For the nine months of FY25, consolidated revenue increased 25% year-on-year to INR3,778 crores, with EBITDA growing 109% to INR1,404 crores, and PAT rising 142% to INR994 crores.

    02

    Order Book and Future Inflow Strategy

    As of December 31, 2024, the total order book stands at INR3,888 crores, which expands to INR5,517 crores when including two HAM projects awaiting appointed dates and two irrigation projects awarded in January 2025. The company aims for an order inflow of INR8,000-10,000 crores within the next 3-4 months. This strategy involves diversifying into state government highway projects (Tamil Nadu, Karnataka), irrigation projects (MP, Rajasthan), urban infrastructure (flyovers in Telangana, Andhra Pradesh), and open mining operation contracts.

    03

    HAM Project Progress and Monetization

    Physical progress on HAM projects as of December 31, 2024, ranges from 23% (Marripudi to Somavarappadu) to 90% (Ramanattukara to Valanchery). The company has invested INR589 crores out of a revised equity requirement of INR990 crores for all HAM projects, with an additional INR401 crores to be infused by FY27. KNR expects to monetize one matured HAM asset (Palani) by the end of Q1 FY26 (June) and the remaining three by December end FY26, following PCOD receipt.

    04

    Working Capital and Telangana Receivables

    The company faces a significant challenge with receivables from the Telangana government, totaling INR977 crores for irrigation projects, with INR577 crores certified. These payments have been delayed by 1 to 1.5 years, prompting the company to pursue legal action. Management is rigorously following up to recover INR600 crores from the Telangana government in Q4 FY25. Consolidated debt as of December 2024 was INR1,486 crores, with a net debt to equity ratio of 0.33.

    05

    Industry Landscape and Bidding Environment

    The construction sector has seen a slowdown in NHAI project awards over the past 1.5-2 years, coupled with aggressive bidding, with some HAM projects going at 20-25% below cost and EPC projects at 40% below. This aggressive bidding, often by smaller contractors, has led to concerns about project quality and delays. NHAI is now reportedly focusing on larger project sizes (INR2,000-3,000 crores) to address these issues, which KNR believes will benefit established players.

    06

    Future Outlook and Diversification Efforts

    KNR anticipates a 10-15% revenue degrowth in FY25, with FY26 revenue targeted at INR3,500-4,000 crores, as the current order book provides 1.5-2 years of visibility. The company is actively bidding for projects in state government highways, irrigation, urban infrastructure, and mining operations. They are also exploring BOT toll projects, partnering with entities like Adani and Cube Highways for EPC work, and aiming to maintain EBITDA margins between 15% and 15.5% going forward⏳.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.