KNR CONSTRUCTIONS

CLASS PRESENTATION

Amit Chauhan WMP13006

Pankaj Bhandari WMP13037
Rahul Chauhan WMP13042

26 March 2019
3-1 26 March 2019
 Back Ground
KNR Construction Limited (KNRCL)

 Incorporated in 1995, KNR Constructions Limited is an infrastructure project

development company
 Provide EPC (Engineering, Procurement and Construction) services across sectors
namely roads & highways, irrigation and urban water infrastructure management.
 KNR's project execution strength primarily is in road transportation engineering
projects ( construction and maintenance of roads, highways, flyovers and bridges ).

Current Project Executions: (2007)

 24 contracts spread across various states in the country.
 Key Clients : Governmental agencies like the NHAI, and public works department
under the State Governments of Andhra Pradesh, Madhya Pradesh, Karnataka, Tamil
Nadu and Uttar Pradesh
26 March 2019
3-2
 IPO SNAPSHOT

The objects of the Issues are to achieve the benefits of listing on the Stock Exchanges
& to raise capital for :
a. Further Equity investment in BOT projects,
b. Contribution towards the unsecured loan portion in the BOT Project (namely
AP-07),
c. Purchase of capital equipment, and
d. For meeting working capital requirement.

26 March 2019
3-3
 QUESTIONS
Grade the IPO of KNR Constructions

 CRISIL’s IPO Grading Parameters CRISIL IPO GRADING SCALE

 Business Prospects (Industry and Company) GRADE 5 : Strong Fundamentals
 Project Related Risk GRADE 4 : Above Average Fundamentals
 Financial Performance GRADE 3 : Average Fundamentals
 Management Quality GRADE 2 : Below Average Fundamentals
 Corporate Governance GRADE 1 : Poor Fundamentals

 What Industry Said: (Recommendations vs. IPO Grading)

26 March 2019
3-4
 Business Prospects – Industry / Company
 Infrastructure project development company providing engineering,
procurement and construction services across various fast growing sectors
namely roads & highways, irrigation and urban water infrastructure
management.

 Execution strength primarily is in road transportation engineering projects -

construction and maintenance of roads, highways, flyovers and bridges

 Strong project management skills help us in timely and successful

completion of projects

 Gained expertise in construction of roads on EPC basis and further

 Diversified into other infrastructure segments like irrigation, water supply

and urban water infrastructure management

 As on November 30, 2007, we have 25 projects on hand across various

states in India covering Uttar Pradesh, Madhya Pradesh, Assam, Andhra
Pradesh, Karnataka, and Tamil Nadu

26 March 2019
3-5
 Business Prospects – Industry / Company
 Estimated unexecuted order book position as at November 30, 2007 was
Rs. 17,338.25 million, which is approximately 5.4 times the operational
income of FY 2006-07 on a consolidated basis

 Qualified and experienced employees led by a proven management team

 Good clientele base, comprising of governmental agencies like the NHAI,

and public works department under the State Governments of Andhra
Pradesh, Madhya Pradesh, Karnataka, Tamil Nadu and Uttar Pradesh.

26 March 2019
3-6
 Financial Performance
2008 Comments

PAT 271.1 Given in Statement - Page 91)

Retention Ratio (2007) 88.47% Calculated based on DPS Actual

Book Value of 2007 573.96 Given in Statement - Page 91)

Retained Value to Carry Over 239.83243 PAT * BV2007

Expected Book Value 2008 813.79243 BV2007+Retained Value

ROE% 33.31% ROE% = Net Profit / Net Worth

Growth Rate (g) 29.47% g = ROE * Retention Ratio

Comparison With Peers

Company EPS PE RONW% NAV(Rs)
J Kumar Infra Project Pvt
Ltd 6.41 11 37.47 17.1
Kaushlya Infrastructure
Development 3.44 8 17.65 21.43
Supreme Infrastructure Ltd 12.27 5 32.21 38.07
MS Project India Ltd 6 12 8.1 19.7
9

26 March 2019
3-7
 Financial Performance
2009
PAT 350.9957686
Retention Ratio 0.15
New Capital 7.87457
Allottment Price TBC
Return from New Capital 1.18*TBC
Total Pat of 2009 350.99M+1.1812X

Total Equity Shares 28.12

EPS for 2009 (350.99M+1.1812X)/28.12
Industry Average PE 9
Price = PE * EPS 180.58

 Price is close to 180 which is upper band and hence the Investor
can subscribe to the same

26 March 2019
3-8
 Management Quality
Mr. K. Narasimha Reddy Promoter and Managing Director having over 38
years of experience in the roads and infrastructure sector . Driving force
behind Company’s establishment and growth, and grown to current size and
scale under his able leadership

Execution of project closely monitored by the promoters is high in execution

Directors are from diverse background

Succession plan of the firm is not clear

26 March 2019
3-9
 Our Rating
We believe that Organization are in a reasonable position and price
band is inline with our valuation method.

Given the focus is only on the IPO Grading parameter, our ranking is 3/5
for the same : GRADE 3 : Average Fundamentals

26 March 2019
3-10
 Subscription Status / Listing Day

26 March 2019
3-11