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Multibagger Mid Cap Infra Stock Falls 14%, Motilal Oswal Recommends Buy For 22% Upside
Leading brokerage firm Motilal Oswal has recommended investors to buy KNR Constructions Ltd with a target price of Rs 310 apiece. The current market price of the stock is Rs 255 apiece thus implying an upside of 22% if investors decide to buy the stock at current market price. According the analyst, "KNR is currently having an order book of INR80b and is aiming for INR30-40b of order wins in the remaining months of FY23." Check key details below:
1. KNR Constructions Ltd Stock Performance & Return
The last trading price of the stock is Rs 255 apiece with an intraday gain of 2.97%. The stock's 52-week high is Rs 329 apiece and 52-week low is Rs 202 apiece, respectively. The company has a market capitalisation of Rs 7177 crore. The stock has given 117% return in last 3-years and 57% return in last 5-years. It has declined 13% in last 1-year.
2. Robust Open Tender Pipeline To Provide Significant Opportunity For KNR
Though the awarding activity by NHAI has been soft to date (2,757kms of awarding) in FY23, the open tender pipeline of ~INR1,144b (comprising 4,100kms of NHAI projects) provides comfort over the next few months. The pipeline could well fulfill KNR's order inflow target of INR30-40b in the remaining months of FY23, mostly in the highways segment.
3. Order Book Position Healthy
KNR's order book was healthy at INR80b at end-2QFY23 despite the tepid order inflows during the last few quarters. Due to aggressive bidding and only a few projects being tendered, KNR has refrained from bidding aggressively for Road projects.
However, the execution of existing strong order book and robust tender pipeline from NHAI would be KNR's key revenue drivers over the next three years.
4. Valuation
According to Motilal Oswal, "We expect the execution to be strong, particularly in FY24, as execution from KNR's existing order book ramps up. We expect its margins to be stable with input costs reducing along with some execution carried out in the high-margin irrigation projects. We maintain our BUY rating with an SoTP-based TP of INR310, implying 25% potential upside.
5. About KNR Constructions
KNR Constructions Limited is a leading infrastructure project development company. It provides engineering procurement and construction services across various sectors, such as roads, bridges, flyovers, highways, and water infrastructure management.
Disclaimer
The stock has been picked from the brokerage report of Motilal Oswal. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.
