Company Update : KNR Construction Ltd By Motilal Oswal Financial Services Ltd
Miss in execution
Earnings snapshot: 3QFY25
* During 3QFY25, KNR received certain one-time adjustments and arbitration claims. For a like-to-like comparison, we have adjusted these items in revenue, other income, other expenses, and total taxes for 3QFY25 and showed them as exceptional items. The arbitration claims were relating to the following:
* In Patel KNR Heavy Infrastructures Ltd, the company received claims worth INR355m (included in revenue) and interest of INR1b on such claims (included in other income). Expenses of INR12.9m related to such claims were included in other expenses and INR347m was included in the current tax.
* Revenue declined 22% YoY to ~INR7.1b in 3QFY25 (20% below our estimate).
* EBITDA margin increased 30bp YoY to 16.6% (vs. our estimate of 16.5%) in 3QFY25.
* EBITDA declined 20% YoY to INR1.2b (against our estimate of INR1.5b).
* The impact of weak execution was offset by higher other income, lower depreciation and interest expenses, which resulted in APAT of INR903m (in line).
* The order book currently stands at ~INR50b.
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