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CRISIL IER Independent Equity Research
KNR Constructions Ltd
Q4FY16 results first cut: Standalone earnings above expectations
Industry: Construction & Engineering May 30, 2016
KNR Constructions Ltd’s Q4FY16 standalone earnings surpassed our expectations.
Highlights are mentioned below and will be followed by a detailed quarterly update.
● Revenue increased 16% y-o-y and 45% q-o-q to ₹2.96 bn. FY16 revenue increased marginally by 1.3% to ₹8.9 bn.
● EBITDA rose 30% y-o-y and 42% q-o-q to ₹451 mn. FY16 EBITDA grew 12% to ₹1.4 bn.
EBITDA margin expanded by 168 bps y-o-y (down 33 bps q-o-q) to 15.3%. FY16 EBITDA margin expanded by 144 bps to 15.8%.
● Consequently, adjusted PAT increased 33% y-o-y and 88% q-o-q to ₹339 mn. FY16 adjusted PAT grew 21% to ₹909 mn.
CRISIL Research’s current IER coverage on KNR Constructions Ltd
In our report dated March 07, 2016, we had assigned a fundamental grade of 3/5 (good fundamentals) and fair value of ₹656 per share. We are reviewing the results in detail and will release an update after discussions with management. The outstanding fundamental grade and fair value may undergo a revision in the update.
KEY FORECAST
(₹ mn) FY14 FY15 FY16# FY17E FY18E
Operating income 8,141 8,517 8,877 12,666 15,174
EBITDA 1,303 1,440 1,406 1,961 2,300
Adj net income 609 879 909 1,017 1,255
Adj EPS (₹) 22.2 26.8 32.3 36.2 44.6
EPS growth (%) 37.2 41.0 20.6 39.3 23.4
Dividend yield (%) 0.2 0.2 0.2 0.3 0.3
RoCE (%) 13.1 14.4 11.2 17.8 19.1
RoE (%) 13.0 16.3 14.0 14.9 15.8
PE (x) 24.4 17.3 16.7 14.9 12.1
P/BV (x) 3.0 2.7 2.1 2.1 1.8
EV/EBITDA (x) 12.3 11.2 10.8 8.0 6.9
#: Based on abridged financials
Source: Company, CRISIL Research estimates
KEY STOCK STATISTICS
NIFTY/SENSEX 8179/26726
NSE/BSE ticker KNRCON
Face value (₹ per share) 10
Shares outstanding (mn) 28.1 Market cap (₹ mn)/(US$ mn) 15,194/226 52-week range (₹)/(H/L) 653/410
Beta 1.25
Free float (%) 39.3%
Avg daily volumes (30-days) 11,542 Avg daily value (30-days) (₹ mn) 6.2 FAIR VALUE MOVEMENT SINCE INITIATION
PERFORMANCE VIS-À-VIS MARKET Returns
1-m 3-m 6-m 12-m
KNR -3% 16% -11% 3%
NIFTY 500 3% 17% 2% -2%
ANALYTICAL CONTACT
Bhaskar Bukrediwala [email protected] Mohit Pandey [email protected] Sayan Das Sharma [email protected] Client servicing desk
+91 22 3342 3561 [email protected] Q4FY16 Results Summary (Standalone)
(₹ mn) Q4FY16 Q3FY16 Q4FY15 q-o-q (%) y-o-y (%) FY16 FY15 y-o-y (%)
Net sales 2,958 2,038 2,557 45.2 15.7 8,877 8,761 1.3
Material cost 2,029 1,410 1,592 43.9 27.5 6,063 5,966 1.6
Material cost (% of net sales) 68.6% 69.2% 62.2% -61bps 635bps 68.3% 68.1% 21bps
Employees cost 116 106 110 9.4 4.9 435 381 14.3
Other expenses 362 204 508 77.4 -28.7 973 1,154 -15.6
EBITDA 451 318 347 42.1 30.0 1,406 1,261 11.5
EBITDA margin 15.3% 15.6% 13.6% -33bps 168bps 15.8% 14.4% 144bps
Depreciation 110 108 126 1.4 -12.6 431 541 -20.2
EBIT 341 209 221 63.1 54.3 975 721 35.2
Interest and finance charges 40 26 32 55.1 27.2 126 122 3.1
Operating PBT 301 183 190 64.2 58.8 848 598 41.8
Other Income 95 16 54 482.0 76.1 188 125 50.9
Exceptional inc/(exp) 59 148 - NM NM 520 - NM
PBT 455 348 244 30.8 86.7 1,557 723 115.3
Tax (124.7) 19.6 (0.3) NM NM (55) (7) NM
PAT 579 328 244 76.6 137.6 1,611 730 120.7
Adj PAT 339 180 256 88.3 32.5 909 754 20.6
Adj PAT margin 11.5% 8.8% 10.0% 262bps 146bps 10.2% 8.6% 163bps
Adj EPS (₹) 12.1 6.4 9.1 88.3 32.5 32.3 26.8 20.6
Source: Company, CRISIL Research
0 500 1,000 1,500 2,000 2,500
0 100 200 300 400 500 600 700
23-Nov-11 23-Feb-12 23-May-12 23-Aug-12 23-Nov-12 23-Feb-13 23-May-13 23-Aug-13 23-Nov-13 23-Feb-14 23-May-14 23-Aug-14 23-Nov-14 23-Feb-15 23-May-15 23-Aug-15 23-Nov-15 23-Feb-16 23-May-16 ('000) (₹)
Total Traded Quantity (RHS) CRISIL Fair Value KNR
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Explanation of CRISIL Fundamental and Valuation (CFV) matrix
The CFV Matrix (CRISIL Fundamental and Valuation Matrix) addresses the two important analysis of an investment making process – Analysis of Fundamentals (addressed through Fundamental Grade) and Analysis of Returns (Valuation Grade) The fundamental grade is assigned on a five-point scale from grade 5 (indicating Excellent fundamentals) to grade 1 (Poor fundamentals) The valuation grade is assigned on a five-point scale from grade 5 (indicating strong upside from the current market price (CMP)) to grade 1 (strong downside from the CMP).
CRISIL
Fundamental Grade Assessment
CRISIL
Valuation Grade Assessment
5/5 Excellent fundamentals 5/5 Strong upside (>25% from CMP)
4/5 Superior fundamentals 4/5 Upside (10-25% from CMP)
3/5 Good fundamentals 3/5 Align (+-10% from CMP)
2/5 Moderate fundamentals 2/5 Downside (negative 10-25% from CMP)
1/5 Poor fundamentals 1/5 Strong downside (<-25% from CMP)
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