01 — At a Glance
The EPC Contractor That’s Better at Asset Sales Than Road Contracts
- 52-Week High / Low₹254 / ₹117
- TTM Revenue₹2,978 Cr
- TTM PAT₹544 Cr
- Full-Year EPS (TTM)₹16.7
- Annualised EPS (Q3×4)₹14.64
- Book Value₹169
- Price to Book0.71x
- Dividend Yield0.21%
- Debt / Equity0.49x
- Order Book₹8,849 Cr
The Auditor Presents: KNR closed Q3 FY26 with ₹743 crore in consolidated revenue (-12.4% YoY), ₹103 crore PAT (-58.6% YoY), but a 28.6% ROCE — which is respectable for a roads contractor. Standalone margins hit 5.2% (ouch), driven by project execution chaos on Kerala’s NH-66. But here’s the kicker: the company just struck a ₹1,543 crore deal to monetize four HAM SPVs to Indus Infra Trust. CMP ₹117. P/E 6.05x. Trading at 0.71x book. The math screams “deep value” — if you believe roads will happen again.
02 — Introduction
Welcome to Construction: Where Margin Collapse Is a Feature, Not a Bug
KNR Constructions. Hyderabad-based. Est. 1995. They build roads, bridges, irrigation projects, and the occasional flyover that makes you question the civil engineer’s choice of coffee brand on design day. The company has executed 79 projects across 11 states, laid 8,700+ lane kilometers of asphalt, and somehow managed to stay profitable through the NPA boom, commodity crashes, and a 50% stock decline in 12 months.
In the Feb 2026 concall, management painted a picture of a sector in “moderation” — i.e., highways ministry stopped awarding projects at a pace that keeps contractors employed. The government’s capex promise of ₹12.2 lakh crore looks good on PowerPoint. The actual awards? Muted. Hence, KNR’s latest genius move: monetize your best assets to a PE-backed infra fund and use the cash to fuel a new bidding spree targeting ₹10,000–12,000 crore in order inflow by September 2026. Translation: we’re hungry, we’re under-loaded, and we’re willing to eat margin to win.
Q3 FY26 was a bloodbath. Standalone EBITDA margin: 5.2% (down from 13–14% historically). Consolidated PAT: ₹103 crore (down 59% YoY). Yet the order book is ₹8,849 crore, and after the Indus monetization closes, the company will have ₹1,500 crore in fresh ammunition. Roads may not be awarding aggressively. But KNR is positioning for the next cycle with the ruthlessness of a contractor with nothing left to lose.
Concall Intel (Feb 2026): Management admitted margins are “quite difficult” near 13–14% levels. “FY27 expect something near 9–10%.” Translation: your favourite infrastructure company is voluntarily accepting lower margins. It’s like a restaurant cutting prices in a recession. Technically sound, fundamentally depressing.
03 — Business Model: WTF Do They Even Build?
Roads, Bridges, Dams, and the Occasional Argument With Government.
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