KNRCON - KNR Constructions Limited Share Price

KNR Constructions Limited's management provided an optimistic outlook for the infrastructure sector, particularly in the context of highway projects. They highlighted that, despite recent challenges, project award activity is set to improve, with the National Highways Authority of India (NHAI) inviting bids for projects worth INR 1.5 trillion. Capital expenditure in the Union Budget for FY '26-27 is reinforced by a 9% increase to INR 12.2 lakh crores, indicating continued government support for infrastructure-led growth.

Key forward-looking points include:

1. Order Book and Inflow: The total order book as of December 31, 2025, stands at INR 8,849 crores, with an expected order inflow of INR 10,000-INR 12,000 crores by September 2027. The current order book comprises 29% road projects, 19% irrigation, 12% pipelines, and 40% mining projects.

2. Investment and Valuation: The company has invested INR 727 crores out of the revised equity requirement of INR 962 crores for HAM projects. An additional infusion of INR 235 crores is planned over FY '26 and FY '27.

3. Revenue Projections: For FY '26, KNR anticipates total revenue of around INR 2,000 crores, projecting about INR 450 crores for Q4 FY '26. For FY '27, another INR 2,000 crores is targeted based on existing order books.

4. Operational Highlights: The company reported a consolidated net profit of INR 332 crores for the first 9 months of FY '26, with an EBITDA margin of 27.1%. They noted that while revenue may be subdued in the near term, the fundamental strengths in project awards and the government's initiatives provide a sustainable growth trajectory.

5. Debt Management: The consolidated debt as of December 31, 2025, is INR 2,443 crores. Post-divestment of certain SPVs, the expected consolidated debt is anticipated to decrease significantly.

The management aims to navigate current challenges effectively while positioning KNR for a robust growth phase driven by ongoing projects and anticipated government contracts.

Question: "In the balance of fourth quarter, how much execution or the revenue are we looking at out of this INR 8,850 crores order book? And out of this in FY '27, how much revenue are we looking at?"

Answer: We're expecting to execute around INR 2,000 crores this financial year from our current order book, which is approximately INR 8,850 crores, excluding some mining projects that will take longer to start. The ongoing project on the Bangalore-Vijayawada Highway is anticipated to close by April, with other works continuing. We also plan to target new tenders in irrigation and railways to create a robust pipeline.

Question: "So, let us say, we do another INR 500 crore kind of execution now. For FY '27, how one can look at the execution or the revenue for FY '27 and particularly for FY '28?"

Answer: For FY '27, we anticipate could execute around INR 2,000 crores based on our existing order book. Additional new order wins would be a bonus, and while FY '27 may show lower revenues, FY '28 is expected to be a brighter year. By FY '28, with the new projects coming online, we could potentially reach around INR 4,500 crores in revenue.

Question: "What is the status now for NHAI projects? Are they putting more projects for bidding or is there still a stress in the system?"

Answer: We anticipate a healthy flow of projects from NHAI, with 53 bids awaited by March. The sizes of these projects are mixed, with several large-scale ones. While the market is competitive, we are actively targeting profitable projects. Certain aggressive bidding paired with strategic interest in railways and irrigation projects could yield positive results.

Question: "With all the deals recently, what will the consolidated debt look like after we receive all the money?"

Answer: As of December, our consolidated debt stood at INR 2,400 crores. After divesting through our SPVs, we expect the debt to drop to approximately INR 300 crores. The anticipated debt post-transactions and ongoing projects will remain manageable and allow us to pursue new projects effectively.

Question: "Sir, you indicated that we will be closing at INR 2,000 crores revenue in FY '26. So, there will be a sharp fall in Q-o-Q business in Q4?"

Answer: Yes, our projections indicate that Q4 revenue will be around INR 450 crores, leading us to a total of INR 2,000 crores for FY '26. This drop is linked to the current order book's size and expected completion timelines on ongoing projects.

Question: "So, if you can give us some comments on Kaleshwaram Package 3 and Package 4, how much needs to be done more?"

Answer: For Package 3, no outstanding receivables remain as certified bills have been paid. In Package 4, we have a pending certified bill of INR 677 crores, while the unbilled amount across both packages totals approximately INR 1,430 crores. We are working closely with the government for timely payments.

Question: "What is our CAPEX guidance for FY '26 and '27?"

Answer: Our understanding is that the existing CAPEX is sufficient unless new projects arise that necessitate an additional investment. We may target a potential CAPEX of around INR 100 crores for the coming year, depending on project inflow.

Question: "For the two new orders which we got, when do we expect to start the work on both of them?"

Answer: Work on the Mir Alam project has already commenced with mobilization in progress. The other project, while facing delays due to tree cutting issues, is also set to begin shortly. We expect both to adhere to the projected 24-month completion timeline.

Please note, the responses above summarize key aspects of the Q&A session while ensuring the integrity of the information provided in the earnings call transcript.