Over the past decade, KNR Constructions, an infrastructure company, has provided its shareholders with significant returns, with its stock price soaring from ₹7.37 apiece to the current price of ₹265, yielding a tremendous return of 3500%.
On April 4, 2022, the stock hit a 52-week high of ₹308.8, and on October 20, 2022, it hit a 52-week low of ₹202.7. Taking the current price into account, the stock is trading 30.71% higher than its 52-week low and only 12% away from its one-year high.
This year, the stock produced a decent return of almost 4%, while the Nifty50 has fallen by 6.25% during the same period. The stock gained momentum in March, on the back of several order wins.
On March 10, the company announced that it had secured a project worth ₹690 crore, for constructing access-controlled four-laning with a paved shoulder on National Highway 275 in the state of Karnataka.
Earlier on March 1, KNR received an order worth ₹665 crore for the development of a six-lane access-controlled Greenfield Highway from Marripudi to Somvarappadu of (NH-544G) Bengaluru-Vijayawada economic corridor on HAM mode under Bharatmala Pariyojana Phase-1 in the state of Andhra Pradesh.
Following the company's Q3 FY23 performance, the domestic brokerage firms have maintained their bullish stance on the stock, citing strong growth opportunities. Sharekhan has retained its "buy" call on the stock with a target price of ₹310 apiece.
The brokerage said the company is expected to benefit from the government’s infrastructure spending, especially in roads and highways, although in the near term, the company faces a highly competitive environment along with delays in opening up bids.
KNR Constructions is looking at other sectors, such as railways and metros, which can provide growth, although initially at lower margins as per its standards. The company’s current order book remains strong for providing growth over the next two years, said the brokerage.
Similarly, Axis Securities reiterated its "buy" rating on the stock but trimmed its target price of Rs. 310 per share. The Union Budget for 2023-24 has increased the road sector's Capex outlay by more than 30%, which provides significant opportunities for KNRCL and companies alike, it says.
The brokerage expects a revenue, EBITDA, and APAT growth of 11%, 7%, and 12%, respectively, over the FY22-24E period.
As of Q3 FY23, the company’s order book stood at ₹8,100 crore. The company expects an order inflow of ₹4,000–5,000 crore from road projects in Q4 FY23. The company has a bidding pipeline of ₹35,000 crore and is submitting bids for ₹17,000 crore, it added.
Further, ICICI Direct Research has also kept its "buy" rating on the stock with a target price of ₹305 per share. The brokerage said the company is likely to be one of the prime beneficiaries of the roads and water segment.
The brokerage stated that KNR is a proxy play on the increased focus on roads and the overall infrastructure push.
According to Trendlyne shareholding data, FIIs raised their stake in the company to 5.8% in the December 2022 quarter, up from 4.6% in the December 2021 quarter. Mutual funds also raised their holdings to 34.9% from 34.1% in the same period.
The promoters own 51.1% of the shares in the company, while regular shareholders own 8.2% at the end of Q3FY23.
19 analysts polled by MintGenie on average have a 'strong buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
