Motilal Oswal Maintains Neutral Rating on KNR Constructions, Targets Rs 130

Motilal Oswal Downgrades KNR Constructions Due to Weak Execution

KNR Constructions, a leading construction company, reported a disappointing performance in the fourth quarter of FY26, with its revenue declining by approximately 37% year-over-year (YoY) to INR5.3 billion. This figure was 16% above the research firm's estimate. The company's EBITDA margin decreased by 850 basis points YoY to 5.3% in 4QFY26, which was significantly lower than the estimated 9.9%. EBITDA fell by approximately 76% YoY to INR283 million, missing the estimate of INR460 million. Additionally, the company's attributable profit after tax (APAT) decreased by 74% YoY to INR192 million, which was lower than the estimated INR278 million.

The company's weak operating performance was reflected in its financials, with revenue, EBITDA, and APAT falling by approximately 35%, 66%, and 73%, respectively, in FY26. Despite this, the company's current order book stands at approximately INR86.7 billion, including INR35.5 billion from a mining project.

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The research firm notes that order awarding activity improved during the quarter, with KNR emerging as the lowest bidder (L1) in projects worth INR32.3 billion. However, the company's revenue is expected to improve only in FY28, when recently won orders move into execution. The firm has cut its earnings estimates for FY27 and FY28 by 8% and 3%, respectively, factoring in weak execution. It expects revenue and EBITDA compound annual growth rate (CAGR) of 22% and 45%, respectively, over FY26-FY28.

The research firm has reiterated its Neutral rating on the stock, with a share price target of INR130, which is based on the stock's current market price.