1. At a Glance
Hyderabad’s EPC specialist, KNR Constructions, mixes engineering wizardry with margin mastery. With an OPM that makes peers blush (34%) and a P/E of just 5.6x, the ₹6,285 Cr market cap company is quietly laying golden roads (literally).
2. Introduction with Hook
If infrastructure is India’s economic skeleton, KNR is the orthopedic surgeon. From highways to irrigation canals, KNR’s concrete obsession is borderline clinical.
- FY25 Net Profit: ₹1,002 Cr
- ROCE: 29% (Mic drop-worthy)
Now toss in a ₹4,800 Cr coal contract + early delivery bonuses + ongoing Hybrid Annuity Model (HAM) works. And oh, they did all this while the stock is down 37% YoY. Contrarian jackpot?
3. Business Model (WTF Do They Even Do?)
KNR = Roads + Water + Irrigation projects.
Operating via EPC, BOT, and HAM models:
- EPC (Engineering, Procurement, Construction): Traditional turnkey execution.
- HAM (Hybrid Annuity Model): Govt pays 40%, KNR builds, maintains, and gets paid over 15-20 years = steady cash.
- BOT (Build-Operate-Transfer): A risky baller move where KNR takes toll revenues.
Also dabbles in irrigation and mining (₹4,800 Cr coal contract).
4. Financials Overview
| FY | Revenue (₹ Cr) | PAT (₹ Cr) | OPM % | ROCE % | EPS (₹) |
|---|---|---|---|---|---|
| FY21 | 2,904 | 383 | 24% | 22% | 14.49 |
| FY22 | 3,606 | 366 | 22% | 20% | 13.58 |
| FY23 | 4,062 | 439 | 23% | 21% | 16.29 |
| FY24 | 4,429 | 752 | 24% | 26% | 27.64 |
| FY25 | 4,753 | 1,002 | 34% | 29% | 35.62 |
OPM of 34% in FY25? Who’s cooking these margins? Michelin-star engineers?
5. Valuation
With EPS ₹35.6 and P/E just 5.6x, KNR is dirt cheap. Infra peers like L&T trade at 30x. Let’s calculate FV.
Fair Value Range:
- P/E 12x: ₹427
- P/E 15x: ₹535
- P/E 18x: ₹640
Current Price: ₹224
Discount or distress sale?
6. What’s Cooking – News, Triggers, Drama
- HOT: ₹4,800 Cr coal mining contract in Jharkhand (5+ years)
- SPICY: Early completion of ₹1,041 Cr highway project → ₹3.26 Cr bonus
- MILD BURN: Show cause from NHAI over structural issue → 1-month suspension for sub
- HISTORY: ₹317 Cr received from NHAI settlement in Oct 2024
- POTENTIAL: HAM project completions = annuity cash flows for next 15+ years
Plot twist: They’re now turning into a PSU-chasing contractor with strong credibility and cash.
7. Balance Sheet
| Particulars | FY23 | FY24 | FY25 |
|---|---|---|---|
| Equity | ₹56 Cr | ₹56 Cr | ₹56 Cr |
| Reserves | ₹2,723 Cr | ₹3,498 Cr | ₹4,485 Cr |
| Borrowings | ₹652 Cr | ₹1,262 Cr | ₹1,849 Cr |
| Net Worth | ₹2,779 Cr | ₹3,554 Cr | ₹4,541 Cr |
Key Points:
- Debt up 3x in 2 years → largely project financing
- Net worth has doubled since FY22
- Still not dangerously leveraged, thanks to juicy margins
8. Cash Flow – Sab Number Game Hai
| Year | CFO | CFI | CFF | Net Change |
|---|---|---|---|---|
| FY23 | ₹1,194 Cr | ₹67 Cr | -₹1,217 Cr | ₹44 Cr |
| FY24 | -₹316 Cr | -₹15 Cr | ₹496 Cr | ₹165 Cr |
| FY25 | -₹567 Cr | -₹167 Cr | ₹480 Cr | -₹253 Cr |
Insights:
- Negative CFO in FY24 & FY25 = aggressive project execution
- CFF infusion = debt-funded growth
- Not alarming yet, but needs watching
9. Ratios – Sexy or Stressy?
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROCE | 21% | 26% | 29% |
| ROE | 16.3% | 27.6% | 28% |
| Working Capital Days | 91 | 85 | 166 |
| Debt/Equity | 0.18 | 0.35 | 0.41 |
Verdict:
Returns? Sexy.
Working capital? Stressy.
D/E? Manageable (still under 0.5).
10. P&L Breakdown – Show Me the Money
| FY | Revenue | EBIT | Net Profit | EPS |
|---|---|---|---|---|
| FY21 | ₹2,904 Cr | ₹699 Cr | ₹383 Cr | ₹14.49 |
| FY22 | ₹3,606 Cr | ₹802 Cr | ₹366 Cr | ₹13.58 |
| FY23 | ₹4,062 Cr | ₹918 Cr | ₹439 Cr | ₹16.29 |
| FY24 | ₹4,429 Cr | ₹1,049 Cr | ₹752 Cr | ₹27.64 |
| FY25 | ₹4,753 Cr | ₹1,625 Cr | ₹1,002 Cr | ₹35.62 |
Consistent topline, exponential bottom line = margin discipline 101.
11. Peer Comparison
| Company | CMP (₹) | P/E | ROCE | OPM | Market Cap (₹ Cr) |
|---|---|---|---|---|---|
| L&T | 3,467 | 31.4 | 14.5% | 13.4% | ₹4.8 L Cr |
| NBCC | 113 | 50.1 | 33.5% | 5.2% | ₹30,524 Cr |
| IRB Infra | 48 | 29.1 | 7.8% | 45.6% | ₹29,041 Cr |
| Techno Electric | 1,527 | 46.9 | 16.5% | 14.9% | ₹17,759 Cr |
| KNR | 224 | 5.6 | 29.2% | 34.2% | ₹6,285 Cr |
Observation: KNR has top-tier OPM and ROCE at the lowest P/E. Hidden gem alert?
12. Miscellaneous – Shareholding, Promoters
| Holder | Jun 2024 | Jun 2025 | Trend |
|---|---|---|---|
| Promoters | 48.81% | 48.81% | Flat |
| FIIs | 8.18% | 7.06% | Slight dip |
| DIIs | 30.75% | 25.11% | Declining |
| Public | 12.27% | 19.03% | Shooting up |
Interpretation:
Retail piling in. DIIs offloading. Promoters steady. Could mean undervalued or about to pop.
13. EduInvesting Verdict™
KNR is the closest thing to a value pick in the infra world. P/E of 5.6x, ROCE of 29%, and a clean execution record (with some potholes, like that NHAI show cause) – this is a company that doesn’t just build roads; it mints them.
But beware: cash flow stress is real, and working capital days have exploded. Still, KNR has walked this tightrope for years and landed bonuses early.
Time to build wealth with a company that builds… everything else.
Metadata
– Written by EduInvesting Analyst | 18 July 2025
– Tags: KNRCL, Infra Stocks, HAM Model, Value Pick, Road Projects, High ROCE, Construction
