KNR Constructions Limited — Q3 FY26 earnings call

Call held 6 Feb 2026

Management summary

KNR Constructions reported a mixed Q3 FY26, with strong consolidated margins but a cautious outlook for near-term revenue and margins due to project completions and competitive bidding. The company is focused on securing new orders, particularly in NHAI, irrigation, and railways, while actively working on asset monetization to reduce debt and recovering significant receivables from the Telangana government. Land acquisition and regulatory approvals remain key challenges impacting project execution timelines.

Highlights

  • Q3 FY26 Consolidated Revenue stood at INR 743 crores.

  • Q3 FY26 Consolidated EBITDA was INR 167 crores, with a margin of 22.4%.

  • Q3 FY26 Consolidated Net Profit reached INR 104 crores.

  • 9M FY26 Consolidated Revenue was INR 2,002 crores, with EBITDA of INR 542 crores and a margin of 27.1%.

  • Order book as of December 31, 2025, was INR 8,849 crores.

  • Target order inflow of INR 10,000-INR 12,000 crores by September 2027.

  • Consolidated debt is expected to reduce to INR 500 crores by March post-divestment.

  • FY27 EBITDA margin guidance is 9-10%, with a sustainable target of 13% from FY28 onwards.

Concerns

  • Execution slowdown due to projects nearing completion and delays in new project starts

  • Delays in land acquisition and regulatory approvals for new projects

Key financials

  1. Consolidated Revenue ₹743 Cr
  2. Consolidated EBITDA ₹167 Cr
  3. Consolidated EBITDA Margin 22.4%
  4. Consolidated Net Profit ₹104 Cr
  5. Consolidated Debt ₹2,443 Cr
  6. Consolidated Net Debt to Equity 0.5×
  7. Working Capital Days 82 days
  8. Order Book ₹8,849 Cr

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 Split (Dec 31, 2025)
    29% Roads19% Irrigation12% Pipeline40% Mining
  • Q3 FY26 Revenue Split
    28% HAM17% Irrigation33% Back to Back20% Own Execution

Guidance & targets

Order Inflow

  • Total Order Inflow Order Inflow · by end of September 2027 · Medium confidence INR 10,000-INR 12,000 crores
    We are hereby aiming at order inflow of approximately INR 10,000-INR 12,000 crores by end of September 2027 with a mix of projects like NHAI, Irrigation and other state government projects.

    — Venkata Ram Rao

Order Book Execution

  • Current Order Book Execution Period (excluding mining) Order Book Execution · High confidence around 2 years
    The current order book will be executed over a period of around 2 years, excluding mining project.

    — Venkata Ram Rao

Revenue

  • Revenue from Current Order Book (Civil Work) Revenue · FY '27 · Medium confidence INR 2,000 crores
    Out of INR 4,300, we can execute around, we can say INR 2,000 crores civil work in the next year, 2027 out of the current order book.

    — Venkata Ram Rao

  • Total Revenue (Worst Case) Revenue · FY '27 · Medium confidence INR 2,000 crores
    So, worst case number is INR 2,000 for next year?

    — Vaibhav Shah

  • Total Revenue (Potential) Revenue · FY '28 · Low confidence INR 4,500 crores
    Sir, most probably it could be possible.

    — K Jalandhar Reddy

  • Total Revenue Revenue · Q4 FY26 · High confidence around INR 450 crores
    Yes, because we have, whatever the existing order book is there, based on that only we are projecting that we will get around INR 450 crores.

    — K Jalandhar Reddy

  • Pipeline Project Revenue Revenue · FY '27 · Medium confidence around INR 400-INR 450 crores
    FY '27, we are targeting around INR 400-INR 450 crores on that project.

    — Venkata Ram Rao

  • Karnataka HAM Projects (Package 4 & 5) Revenue Revenue · FY27 · Medium confidence around INR 500 crores
    Both two projects will be around, you can say, maybe around INR 500 crores on both the projects.

    — Venkata Ram Rao

Profitability

  • EBITDA Margin Profitability · FY '27 · Medium confidence 9-10%
    Maybe it is quite difficult to expect levels like 13-14% levels right now, but I think we can expect something near to 9-10% figures to be deliverable.

    — K Jalandhar Reddy

  • Sustainable EBITDA Margin Profitability · 2028 onwards · Medium confidence around 13%
    But in future actually next year also maybe 9%-10%, but 2028 onwards, once we get all the projects and definitely we should try to get our sustainable EBITDA of around 13%.

    — Venkata Ram Rao

Debt

  • Consolidated Debt Debt · by March · High confidence around INR 500 crores
    So, you can say by March,, after completion of this divestment program, our debt will be around INR 500 crores on consolidation basis.

    — Venkata Ram Rao

Capex

  • Total CAPEX Capex · FY '27 · Medium confidence around INR 100 crores
    So, based on that, we may go up to around, you can say, INR 100 crores CAPEX next year.

    — Venkata Ram Rao

  • Mining Project CAPEX Capex · Q4 FY27 / FY '28 · Low confidence INR 350 odd crores
    So, we expect that somewhere in Q4 of the next year, we may be able to take some CAPEX in that project.

    — Venkata Ram Rao

Execution

  • Pipeline Order First Year Execution Rate Execution · first year (FY27) · Medium confidence around 30%-40%
    So, then definitely land is available, but that is yes, definitely we can do it, around 30%-40% in the first year.

    — Venkata Ram Rao

Project Completion

  • Mir Alam Bridge & Other New EPC Projects Project Completion · by FY '28 · High confidence completed
    Both are going to be completed by FY '28, yes.

    — Venkata Ram Rao

Risks & concerns

  • Execution slowdown due to projects nearing completion and delays in new project starts

    high

    Projects nearing completion lead to lower revenue generation, while new projects face delays in starting.

    Management acknowledged

  • Delays in land acquisition and regulatory approvals for new projects

    high

    Mining, irrigation (Paleru Canal, Sitarama Lift), and Karnataka HAM projects (Pkg 4 & 5) are delayed due to land acquisition and forest clearance issues.

    Management acknowledged

  • Competitive market aggression leading to margin dilution

    medium

    Company is willing to dilute 2-3% of margins for new NHAI projects to secure orders.

    Management acknowledged

  • Significant receivables from Telangana Government for Kaleshwaram projects

    medium

    INR 1,430 crores in total receivables (INR 677 crores certified, INR 650 crores unbilled) are pending from the Telangana Government for Package 4, with a court case ongoing.

    Management acknowledged

  • Increase in consolidated debt

    medium

    Consolidated debt increased from INR 1,847 crores (Mar 25) to INR 2,443 crores (Dec 25), though management expects reduction post-divestment.

    Management acknowledged

Q&A highlights

3 direct
Revenue and Order Inflow Outlook for FY27/FY28, and Margin Sustainability Direct
Out of INR 4,300, we can execute around, we can say INR 2,000 crores civil work in the next year, 2027 out of the current order book. And if any order is coming and we have been able to execute, that will be added. With current order book, definitely we can able to execute around INR 2,000 crores in FY '27. ... Maybe it is quite difficult to expect levels like 13-14% levels right now, but I think we can expect something near to 9-10% figures to be deliverable.

Provides critical forward-looking revenue and margin guidance, highlighting near-term challenges and longer-term aspirations.

Asked by Shravan Shah

NHAI Project Bidding Strategy and Net Debt Post-Divestment Direct
But because the aggression in the market is very heavy here. So, we are also not looking at the margins as we used to look at earlier. Maybe we will have to dilute 2%-3% of the margins and then go ahead. ... So, you can say by March,, after completion of this divestment program, our debt will be around INR 500 crores on consolidation basis.

Reveals competitive pressures on margins in NHAI projects and provides a clear target for debt reduction post-asset monetization.

Asked by Niteen S. Dharmawat

Kaleshwaram Project Receivables from Telangana Government Direct
Total outstanding receivables on this Package 3, there is no outstanding receivables, but for the certified bills are there, it is already paid off. And with respect to Package 4, around INR 677 crores is the certified bill that is pending for payment. And other than this, unbilled is in both the project is around INR 650 crores. So, total around INR 1,430 crores is the amount that we supposed to receive from the Government of Telangana for certified and unbilled portion.

Highlights a significant amount of receivables from a government project and the ongoing efforts to recover them, which impacts working capital.

Asked by Ritesh Poladia

3 min read 7 chapters

Detailed narrative

Q3 FY26 Financial Performance Overview

KNR Constructions reported a consolidated revenue of INR 743 crores for Q3 FY26, with an EBITDA of INR 167 crores, resulting in an EBITDA margin of 22.4%. The consolidated net profit for the quarter stood at INR 104 crores. For the nine months of FY26, consolidated revenue reached INR 2,002 crores, with an EBITDA of INR 542 crores and a margin of 27.1%, leading to a net profit of INR 332 crores. Standalone performance for Q3 FY26 was lower, with revenue at INR 585 crores and EBITDA margin at 5.2%, primarily due to projects nearing completion and additional costs in one viaduct construction.

Order Book and Inflow Outlook

As of December 31, 2025, the company's total order book stood at INR 8,849 crores, with mining projects accounting for 40%, roads 29%, irrigation 19%, and pipeline 12%. Management aims for an order inflow of approximately INR 10,000-INR 12,000 crores by September 2027, with a mix of NHAI, irrigation, and state government projects. The existing order book, excluding mining, is expected to be executed over approximately two years, with an estimated INR 2,000 crores in civil work revenue for FY27.

HAM Project Progress and Equity Infusion

The physical progress on key HAM projects as of December 31, 2025, includes Ramanattukara to Valanchery at 99.4% and Valanchery to Kappirikkad at 98.3%. The company has invested INR 727 crores out of the revised INR 962 crores equity required for all HAM projects, with an additional INR 235 crores to be infused (INR 87 crores in FY26 and INR 148 crores in FY27). Karnataka HAM projects (Package 4 & 5) are expected to contribute around INR 500 crores in revenue for FY27, despite ongoing land acquisition issues.

Asset Monetization and Debt Reduction

KNR Constructions executed a Share Purchase Agreement with Indus Infra Trust for the sale of its 100% shareholding in four SPVs, expecting total proceeds of INR 1,543 crores. Post-completion of this divestment program, the consolidated debt is projected to reduce to around INR 500 crores by March. As of December 31, 2025, consolidated debt was INR 2,443 crores, an increase from INR 1,847 crores as of March 2025, with a net debt to equity ratio of 0.5 times.

Kaleshwaram Project Receivables

The company has significant outstanding receivables from the Telangana Government for Kaleshwaram Package 4, totaling around INR 677 crores in certified bills and an additional INR 650 crores unbilled, making a total of INR 1,430 crores. Management is actively pursuing collection through both government discussions and a court case, with hopes for partial payment by March. This substantial receivable amount impacts the company's working capital, which improved to 82 days as of December 31, 2025, from 93 days in March 2025.

Bidding Strategy and Margin Outlook

Due to aggressive competition in the market, particularly for NHAI projects, management indicated a willingness to dilute EBITDA margins by 2-3% for certain projects to secure new orders. For FY27, the company expects EBITDA margins to be in the range of 9-10%, a reduction from the 9M FY26 consolidated margin of 27.1%. However, management aims for a sustainable EBITDA margin of around 13% from FY28 onwards, once new projects are fully operational and execution stabilizes.

Project Delays and Challenges

Several projects face delays, including the mining project due to forest clearance issues, which is now expected to start in Q2 or Q3 FY27. Irrigation projects like Paleru Canal and Sitarama Lift are also delayed due to land acquisition problems, with a potential start in Q1 FY27. The Bangalore-Vijayawada Highway package is expected to close by April, while the Mir Alam Bridge and other new EPC projects (INR 319 crores contract value) are targeted for completion by FY28, despite initial design changes and tree cutting problems.

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