KNRCON - KNR Constructions Limited Share Price

In the Q1 FY '26 earnings call for KNR Constructions Limited, management provided an outlook reflecting a cautious but potentially positive trajectory for the company. They noted a muted ordering activity in the road sector, with the NHAI awarding only 166 kilometers of highway projects during the quarter, yet highlighted a robust project pipeline valued at INR 3.4 trillion, encompassing 124 highways and expressway projects spanning 6,376 kilometers.

Key forward-looking points include:

1. Order Inflow Target: Management anticipates an order inflow of approximately INR 10,000 crores to INR 12,000 crores by the end of FY '26, which will include a mix of NHAI, irrigation, mining, and other state government projects.

2. Execution Challenges: Despite a strong operational pipeline, management acknowledged the impact of land acquisition processes and NHAI's new bidding norms, which could delay project rollouts. The company aims to execute new orders quickly once awarded, with projections of around INR 2,000 to INR 2,500 crore in revenue for FY '26, significantly lower than previous estimates due to these delays.

3. Mining Project: The company, through a joint venture, secured a contract valued at INR 4,800 crores for the Banhardih coal mine in Jharkhand, marking its entry into the mining sector. Expected revenues from this project are roughly INR 90 crores in the first year and INR 700 crores annually thereafter.

4. HAM Project Progress: As of June 30, 2025, progress for various HAM projects ranges from 43% to 99%. The company has invested INR 676 crore out of a revised equity requirement of INR 990 crores for these projects, with an additional INR 314 crores needed over FY '26 and FY '27.

5. Debt and Working Capital: The consolidated debt as of June 30, 2025, stands at INR 2,018 crores. A rise in working capital days from 93 to 169 days has been noted, attributed primarily to delays in receivables from ongoing projects.

The overall management perspective is cautiously optimistic, focusing on future growth opportunities while navigating current challenges with execution and cash flows.

Major Questions and Answers from KNR Constructions Limited Q1 FY '26 Earnings Call

Question 1

Alok: What led to such a low execution even if we look at Y-o-Y basis? What is the outlook on execution for 2Q and the remaining part of FY '26?

K. Venkata Ram Rao: The muted execution this quarter was mainly because most of our existing projects are nearly complete. We have only four ongoing projects, which have just started, while others exceeded 90% completion. For Q2, we expect to execute around INR40 crores monthly in dry months, but during rainy months, it could drop to INR10-15 crores. We are projecting full-year revenue guidance of INR2,000 to INR2,500 crores.

Question 2

Alok: Is the revenue guidance for the full year going to be in the range of INR2,000 crores to INR2,500 crores?

K. Jalandhar Reddy: Yes, we anticipate revenues to range between INR2,000 to INR2,500 crores. This range reflects uncertainties in new project starts. If we secure more new orders, this could potentially increase our revenue.

Question 3

Shravan Shah: What revenue are we looking to achieve from the INR3,500 crores mining order?

K. Jalandhar Reddy: In this year, following commencement, we anticipate about INR90 crores revenue. Eventually, we expect to generate around INR700 crores per annum from this mining project once it ramps up.

Question 4

Shravan Shah: How much revenue are we expecting from the water pipeline project worth INR1,073 crores?

K. Jalandhar Reddy: By March next year, we expect to receive around INR500 crores from the pipeline project, with the remaining balance to be completed by November next year.

Question 5

Niteen: Can you clarify the change in your revenue guidance as it has decreased since last quarter?

K. Venkata Ram Rao: Our previous optimistic outlook did not account for the lack of new orders and ongoing project completion. Current guidance reflects reality; we are now targeting INR2,000 to INR2,500 crores for this year.

Question 6

Hetan Jain: How does land acquisition affect the order inflow, particularly in relation to NHAI approvals?

K. Jalandhar Reddy: NHAI is indeed required to complete land acquisition before project awards. Their primary concern is ensuring that 90% of land is secured before initiating the tender process.

Question 7

Rehan Saiyyed: What steps are being taken toward diversification into metro and railway projects?

K. Jalandhar Reddy: We are discussing partnerships and have previously quoted tenders for metro projects. Our ambition is to actively participate in these sectors to expand our portfolio.

Question 8

Faizal Hawa: Will incoming HAM project revenue make us net cash positive?

K. Venkata Ram Rao: Currently, we are cash positive on a standalone basis. The expected monetization of assets will significantly enhance our liquidity, which could reduce interest costs.

Question 9

Bhavin Modi: Can you provide a revenue breakdown by segment for this quarter?

K. Venkata Ram Rao: This quarter, our revenues breakdown included 58% from HAM projects, 31% from EPC road projects, 6% from irrigation, and 5% from back-to-back projects.

Question 10

Shrey Mehta: What was the total capex incurred in Q1 FY '26?

K. Venkata Ram Rao: We incurred a capex of just INR2 crores this quarter, and for the entire year, we expect to spend around INR100 crores.

These responses summarize both the questions and answers addressed during the Q&A session for KNR Constructions Limited's Q1 FY '26 earnings call, focusing on revenue outlook, operational challenges, and project statuses.