Why KNR Construction Share Price is Rising

The construction sector in India is a key driver of economic growth. It contributes significantly to GDP and creates numerous jobs. The sector benefits from government initiatives like infrastructure development and affordable housing schemes.

Increasing urbanisation and foreign investments further boost the industry's potential. This growth has fuelled opportunities for established and emerging players in the market.

One notable player in the Indian construction industry is KNR Constructions. It is a leading infrastructure development company focused on building roads, highways, and bridges. Established in 1995, the company has a strong track record of delivering quality projects on time.

It is also involved in water infrastructure and urban development projects. KNR Constructions operates across multiple states and has earned a reputation for technical expertise and efficient project execution.

KNR Constructions share price has been rising recently. This upward trajectory aligns with the company's strong quarterly performance.

Investors are focusing on the company after it announced impressive financial results. Let's analyse the quarterly results to understand the factors driving this positive momentum.

Good Quarterly Results

For Q2 FY25, KNR Constructions reported an 87% YoY rise in consolidated revenue, of Rs 19.4 billion (bn). This substantial growth was driven by the successful execution of road and irrigation projects. Higher work completion rates contributed to the revenue surge.

The company's operating profit saw a sharp jump of 276% YoY to Rs 8.7 bn, up from Rs 2.3 bn in the same period last year. Operating margins improved significantly by 22.5 basis points to 44.7%. This increase reflects better cost management and higher margins in key contracts.

Profit after tax (PAT) increased by 306% year-on-year (YoY) to Rs 5.8 bn compared to Rs 1.4 bn a year earlier. The rise in net profit was due to strong revenue growth and operational efficiency.

KNR's total order book as of 30 September 2024 stood at Rs 44.1 bn. Contributions came from various sectors, with 33% from the road HAM segment, 23% from irrigation, and 25% from pipeline projects. This diverse portfolio ensures steady revenue generation across sectors.

The rising share price of KNR Constructions can be attributed to its robust quarterly performance. Investors are optimistic due to the significant YoY growth in revenue, profits, and operating margins. The company's strong order book also supports its long-term growth prospects, reinforcing market confidence.

What Next?

KNR Constructions can carve out path for future growth, backed by its strong order book and strategic focus on infrastructure development.

The company plans to bid aggressively for upcoming HAM and EPC projects, with an estimated inflow of Rs 60-80 bn in new orders in the current financial year.

Having delivered decades of robust performance in roads and irrigation, KNR is now expanding into new sectors to counter the slowdown in project awards in its traditional areas. It is building expertise in urban infrastructure, pump storage, railways, and tunnel projects, taking on these projects independently or through joint ventures.

State governments in Andhra Pradesh, Telangana, and Tamil Nadu are launching large-scale irrigation and urban infrastructure projects, while L1 companies in some projects are subcontracting work to experienced EPC firms. This shift presents a significant growth opportunity for the company.

KNR aims to complete its ongoing projects efficiently, targeting milestones that ensure timely payments and optimal resource utilisation.

The company is diversifying its portfolio to include pipeline projects and exploring opportunities in toll-based BOT projects to enhance revenue streams.

Additionally, it plans to monetise its existing HAM assets by selling stakes, which could unlock significant value and generate cash for new investments.

The company is also exploring opportunities in advanced toll collection systems and collaborating with state governments on irrigation projects.

KNR is enhancing its operational efficiency through innovative execution methods and robust cost controls. By diversifying its project mix, focusing on sustainable practices, and tapping into emerging opportunities, KNR aims to build a resilient business model.

How KNR Construction Share Price has Performed Recently

In the past five days, KNR Construction share price has rallied 2.1%. In the last month, it is up 6.6%.

In 2024, so far, its share price surged 21.4% and it went up 6.7% in the last year.

The stock touched its 52-week high of Rs 415 on 31 July 2024 and a 52-week low of Rs 236.7 on 15 March 2024.

About KNR Construction

KNR Constructions is an India-based company infrastructure development company. The company is engaged in the construction of roads, bridges, flyovers, and irrigation projects.

It provides engineering, procurement, and construction (EPC) services across various sectors namely roads and highways, irrigation, and urban water infrastructure management.

Its projects include highway projects, irrigation and water management, river bridges, and urban development. Its ongoing urban development project is Challaghatta Main Valley Project (Package CVD-II). This project involves the remodeling of primary and secondary storm drains, bridges/culverts and related works in Challaghatta Main Valley in Bangalore City.

Its subsidiaries include KNR Agrotech Beverages, KNR Infrastructure Projects, KNR Energy, KNRC Holdings and Investments Private Limited, KNR Tirumala Infra Private Limited, and KNR Srirangam Infra.

For more details, see the KNR Construction company fact sheet and quarterly results.

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Happy investing!

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