KNR Construction

CMP- 282
TP – 293 (Buy)
KNR monetizes Walayar road project

• KNR has entered into a share purchase agreement with Cube Highways to sell its 100% stake in
the Walayar road project.
• Total enterprise value of the deal stands at INR5.3b. As of Sep’19, debt on the project was at
INR1.4b. Thus, the equity value of the deal is estimated at ~INR3.9b or P/Inv of ~1x. This is in line
with our valuation of the project.
• There are further NHAI claims and other governmental instrumentalities, which are a pass
through to KNR as and when realized.

Balance sheet strengthens further –

• best one in road sector The transaction is likely to close in another 2-3 months
• It is expect the balance sheet to strengthen further with net cash position of >INR2b/5b by
FY21/22.
• The company has the best balance sheet position amongst mid-cap road EPC companies. This
should support premium valuations for KNR,

Strong Order book growth

• Given the company’s strong order book position and superior execution capability, It is expected
revenue CAGR of 18% over FY19-22.
• strong balance sheet position, KNR is well positioned to bid for new projects as and when
bidding commences in the road sector.

Order Backlog breakup 2QFY20

Irrigation Road EPC Road-BOT O