KNR Constructions is an infrastructure company that specializes in road construction. It has over 20 years of experience building over 5,400 lane km of roads across 12 states in India. It generates revenue through EPC and BOT contracts with clients such as NHAI. The company has a market capitalization of Rs. 885.89 crore and reported a net profit of Rs. 13.95 crore for the quarter ending September 2014. It has a strong order book and the outlook for the infrastructure industry is positive due to increased government spending.

2. Company Details
KNR Constructions is a medium sized company in the field of surface transport infrastructure.
It specializes in construction of Expressways, National Highways, Rural roads, Flyovers and
Commercial/Residential projects on EPC and BOT basis. KNR has around 20 years of
experience in project execution and has executed about 5400 lane km road projects spread
across 12 states in India.
KNRCL’s strength lies in its ability to provide Engineering, Procurement and Construction
(EPC) services across various fast growing sectors namely construction and maintenance of
roads, highways, flyovers and bridges. The Company has forayed into infrastructure projects
independently as well as through collaborations. Partnering with similar like-minded
companies has enabled KNRCL to undertake high-value projects and increase its geographic
presence. While establishing a commanding presence in southern India especially in Andhra
Pradesh, Karnataka, Kerala and Tamil Nadu in recent years, KNRCL has also diversified into
new markets such as Bihar, U.P ,Madhya Pradesh and Chhattisgarh. Its clientele in the road
segment includes National Highway Authority of India (NHAI), state governments and private
companies. Irrigation and water management projects are from state governments.
The current market capitalization stands at Rs 885.89 crore. The company has reported a
standalone sales of Rs 170.21 crore and a Net Profit of Rs 13.95 crore for the quarter ended
Sep 2014.

3. Category No. of Shares Percentage
Promoters 18,925,241 67.29
NBFC and
Mutual Funds
4,835,146 17.19
General Public 2,826,539 10.05
Other
Companies
1,036,833 3.69
Foreign
Institutions
300,000 1.07
Others 136,011 0.48
Foreign - NRI 63,690 0.23
Market Cap (Rs Cr) – 888.7
Company P/E – 11.82
Industry P/E – 26.59
Book Value (Rs) – 182.52
Dividend (%) – 10
EPS (TTM) – 26.72
Dividend Yield (%) – 0.32
Face Value (Rs) - 10
Share Holding Pattern Financial Details

4. Industry Details
India’s construction sector is forecast to grow at 7-8 percent each year over the next decade
following the election of a new government. The country will see increased economic growth,
and the removal of barriers to foreign investment will “spur demand for construction” over the
coming 12 to 18 months, says PricewaterhouseCoopers India report.
“With a new government having been formed at the Centre, with a strong mandate to stimulate
economic growth, the outlook for the sector appears positive,” it says. An estimated US$1
trillion is being spent on infrastructure over the five years to 2017 and there is increased
investment in industrial projects by the government. But it is the private housing sector that the
PwC report highlights as a key growth area.
“Demand for real estate has been one of the drivers of construction sector growth over the last
10 year. Improvement in economic conditions has the potential to drive demand for real estate,
as housing continues to be a favored investment asset among Indian households. Stating that
there would be increased investment in industrial projects by the government, the report has
noted that it is the private housing sector that would be a key growth area.
The total construction market in India for fiscal year ending March 2014 was $157 billion, an
increase of $4 billion over FY2013. Infrastructure accounts for 49 per cent, housing and real
estate for 42 per cent and industrial projects for 9 per cent, the report noted.

5. Balance Sheet
Sources Of Funds
Mar '14 Mar '13 Mar '12 Mar '11 Mar '10
Total Share Capital 28.12 28.12 28.12 28.12
Equity Share Capital 28.12 28.12 28.12 28.12
Reserves 582.83 435.57 389.66 345.93 294.54
Networth 610.95 463.69 417.78 374.05 322.66
Secured Loans 376.63 142.16 49.85 179.22 155.75
Unsecured Loans 16.50 1.81 3.08 0.15 0.59
Total Debt 393.13 143.97 52.93 179.37 156.34
Minority Interest 55.95 53.40 1.09 1.02 1.00
Total Liabilities 1,060.03 661.06 471.80 554.44 480.00
Application Of Funds
Gross Block 535.23 514.49 505.90 452.61 346.25
Less: Accum. Depreciation 263.02 218.35 184.60 145.28 103.07
Net Block 272.21 296.14 321.30 307.33 243.18
Capital Work in Progress 585.33 109.78 1.18 11.18 11.02
Investments 25.62 48.89 32.99 35.33 34.05
Inventories 53.02 47.27 64.32 45.90 36.94
Sundry Debtors 75.46 115.94 88.33 144.99 191.14
Cash and Bank Balance 57.29 23.37 11.61 45.75 12.53
Total Current Assets 185.77 186.58 164.26 236.64 240.61
Loans and Advances 385.51 485.37 348.18 297.16 329.98
Fixed Deposits 0.00 0.00 0.00 0.00 41.43
Total CA, Loans & Advances 571.28 671.95 512.44 533.80 612.02
Current Liabilities 337.05 352.40 291.90 270.23 352.87
Provisions 57.36 113.30 104.19 68.30 73.62
Total CL & Provisions 394.41 465.70 396.09 338.53 426.49
Net Current Assets 176.87 206.25 116.35 195.27 185.53
Miscellaneous Expenses 0.00 0.00 0.00 5.35 6.24
Total Assets 1,060.03 661.06 471.82 554.46 480.02
Book Value (Rs) 217.24 164.88 148.55 133.01 114.73

6. Profit and Loss Account
Income
Mar '14 Mar '13 Mar '12 Mar '11 Mar '10
Sales Turnover 895.03 764.97 892.23 1,051.70 899.45
Net Sales 895.03 764.97 892.23 1,051.70 899.45
Other Income 17.18 18.47 11.11 2.73 6.69
Stock Adjustments 1.94 -2.04 15.30 2.51 -9.88
Total Income 914.15 781.40 918.64 1,056.94 896.26
Expenditure
Raw Materials 290.67 203.00 320.46 233.04 0.00
Power & Fuel Cost 0.00 1.80 0.00 0.00 0.00
Employee Cost 35.21 29.57 30.18 23.09 21.09
Other Manufacturing Expenses 418.74 0.00 401.54 629.14 729.65
Selling and Admin Expenses 0.00 0.00 0.00 0.00 11.09
Miscellaneous Expenses 20.98 411.93 23.06 19.29 1.79
Total Expenses 765.60 646.30 775.24 904.56 763.62
Operating Profit 131.37 116.63 132.29 149.65 125.95
PBDIT 148.55 135.10 143.40 152.38 132.64
Interest 17.89 12.08 11.81 9.71 13.99
PBDT 130.66 123.02 131.59 142.67 118.65
Depreciation 58.58 55.96 55.60 46.18 32.02
Profit Before Tax 72.08 67.06 75.99 95.60 85.74
Extra-ordinary items 0.00 0.00 0.00 -6.24 0.90
PBT (Post Extra-ord Items) 72.08 67.06 75.99 89.36 86.64
Tax 6.54 15.73 26.84 32.66 30.41
Reported Net Profit 65.54 51.35 49.15 56.71 56.24
Share Of P/L Of Associates 5.09 2.28 2.35 -1.24 -9.60
Net P/L After Minority Interest & Share Of Associates 60.46 49.07 46.81 64.22 65.05
Total Value Addition 474.93 443.30 454.78 671.52 763.62
Equity Dividend 2.81 2.81 2.81 5.62 5.62

7. Dividend History

8. Index and Company Comparison

9. Company Forecast

10. HDFC Mid-Cap Opportunities Fund
Franklin India Smaller Companies Fund
ICICI Pru Infrastructure Fund
Tata Infrastructure Fund
Tata Equity P/E Fund
Days BSE NSE
30 304.39 304.36
50 294.51 294.69
150 247.49 247.69
200 209.48 209.50
PBIT – 7.97 v/s 7.74
ROCE – 8.96 v/s 13.02
Net Profit Margin – 6.62 v/s 6.26
Return on net worth – 9.89 v/s 10.58
Reserves – 583.83 cr v/s 435.57 cr
PAT – 65.54 cr v/s 51.35 cr
Total assets – 1060.03 cr v/s 661.06 cr
Net sales – 895.03 cr v/s 764.97cr
Book Value – 217.24 v/s 164.88
Simple Moving Average
Mutual Fund Holdings
Important Ratios

11. Recommendations
Buy KNR Constructions at current or lower market levels
Reasons for the recommendations are :
Sound financial position of the company
Low working capital cycle when compared with competitors
Starting of collection of toll in many of their projects
Strong record of timely project completion
Less debt when compared with peers
Governments focus on developing infrastructure
Less Non Performing Assets