KNR Constructions (KNRC IN) – Q4FY26 Result Update – Execution recovery deferred to FY28 – HOLD

KNR Constructions (KNRC) reported another weak quarter, resulting in FY26 revenue declining ~38% YoY. Although order inflows improved materially to INR 35bn in FY26 (vs. INR 5bn in FY25), execution of these projects is expected to commence only from Q4FY27E. Additionally, the company secured fresh road orders worth INR 32bn in Q1FY27, taking the current order book to ~INR 119bn (~5x TTM revenue), providing strong execution visibility for FY28E and beyond. Management refrained from providing formal FY27 revenue guidance but indicated a standalone revenue target of over INR 20bn. EBITDA margins are expected to remain subdued at 10–11%, reflecting an intensely competitive bidding environment. On the positive side, HAM asset monetization of INR 15.4bn remains on track, which should strengthen liquidity and adequately fund the remaining HAM equity commitments. We expect earnings recovery to be gradual, with meaningful improvement in execution and profitability likely only from FY28E as recently won projects enter the execution phase and the project mix improves (current book exposure at roads 49%, mining 30%, irrigation 14% and pipelines 7%). We maintain our HOLD rating with a revised SoTP-based target price of INR 119/share (earlier INR 124/share), reflecting lower revenue and EBITDA estimates for FY27–28E. While the stock is currently trading below book value, valuations remain demanding at 18x FY28E EPS