Su­pe­rior Ex­e­cu­tion, Cau­tion in Bid­ding Give KNR the Edge

Healthy or­der book, low net debt-equity ra­tio and bet­ter work­ing cap­i­tal man­age­ment help this con­struc­tion com­pany to stand out among peers

The Economic Times - - Smart -

some of the com­pany’s projects in the South was im­pacted due to Chen­nai floods, en­vi­ron­ment is­sues and avail­abil­ity of land. Th­ese is­sues have been largely re­solved since the com­pany has se­cured a large part of land in South. In the com­ing quar­ters, project ex­e­cu­tion is likely to gather pace.

In the year-to-date pe­riod, Na­tional High­way Au­thor­ity of In­dia has awarded projects to­talling length of 4,700 km. It is ex­pected that the pace of award­ing projects may pick up. The govern­ment’s bud­getary al­lo­ca­tion for road projects for FY17 is ₹ 80,000 crore as against ₹ 39,000 crore in FY16.

An­a­lysts point out that KNR is ex­pected to fol­low its cau­tious ap­proach in bid­ding for hy­brid projects. KNR is ex­pected to se­cure a few hy­brid an­nu­ity projects once ag­gres­sion in bid­ding for th­ese projects cools off. The com­pany is also ex­pected to se­cure a few ir­ri­ga­tion projects in the new state of Te­lan­gana.

On the val­u­a­tion front, con­sid­er­ing FY18 es­ti­mated earn­ings, the stock is avail­able at a P/E of 10.3 com­pared with its three year av­er­age P/E of 21.

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