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* KNR Constructions (KNRC) has been showing excellent pace execution for last couple of quarters and consistently been surpassing revenue expectations.
* KNRC’s order backlog as on 30th Sept’18 stood at Rs18.3bn (0.9x FY18 revenue). Hence, revenue growth is completely dependent upon commencement of construction activities in its 5 HAM projects (~Rs40bn EPC Components).
* KNRC is expected to receive Appointed Dates (ADs) at-least for two HAM Projects in current month and other two in next months. We believe announcement of ADs will propel stock up-move in the near term.
* KNRC has already obtained bank sanctions for HAM projects and necessary resources have already been mobilized. Hence, faster revenue booking may result in higher revenue.
* We maintain our positive view on KNRC mainly owing to strong balance sheet (0.2x net D/E) and sound execution credentials.
* We reiterate our fundamental BUY recommendation on the stock with a SOTP-based Target Price of Rs275.
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