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.