KNR Constructions jumps 14% on robust Q2FY25 results

KNR Constructions saw its shares surge by 14% to ₹324 per share on 13 November, following an impressive financial performance for the July-September quarter (Q2FY25). The surge comes amid a significant rise in net profit, which soared by an extraordinary 310% year-on-year (YoY), reaching ₹585 crore compared to ₹143 crore in the corresponding period last year. This remarkable growth in earnings has strengthened investor sentiment, encouraging more individuals to buy shares online.

Revenue and operating performance exceed expectations

The company's revenue witnessed a robust 87% YoY increase, reaching ₹1,945 crore in Q2FY25, up from ₹1,038 crore in Q2FY24. This growth reflects KNR Constructions' strong project execution capabilities and its ability to secure and complete high-value projects effectively.

At the operational level, the company reported a notable 275% YoY jump in EBITDA, totalling ₹870 crore for the quarter. This was coupled with a substantial expansion in EBITDA margins by 2,242 basis points (bps), elevating margins to 44.7%. Such improvements underline the company's enhanced operational efficiency and cost management strategies, contributing to the overall profitability.

Analyst perspectives

According to market analysts, the positive performance in Q2FY25 has elevated KNR Constructions' position within the construction sector, signalling the potential for continued growth. Out of 17 analysts covering the stock, five have issued a "buy" call, while six have maintained a "hold" recommendation, and six have suggested a "sell" rating. This mixed response reflects varying views on the stock’s valuation following its substantial price movement.

However, the sharp increase in profits and revenues has underscored the company’s resilience and strong management. Industry experts point out that such results have been a driving factor for investors looking to buy shares online, as KNR Constructions' performance stands as a testament to its robust business model.

Strategic initiatives and future outlook

During the prior month, KNR Constructions entered into a share purchase agreement for the transfer of its entire stake in KNR Muzaffarpur Barauni Tollway to JKM Infra Projects. Additionally, KNRC Holdings and Investments, a wholly-owned subsidiary, signed a similar agreement to transfer its 100% stake in KNR Muzaffarpur Holdings to JKM Infra Projects. These moves are part of the company’s strategic efforts to streamline its portfolio and enhance shareholder value.

Such divestments are expected to provide KNR Constructions with additional liquidity and operational focus. With these strategic steps, analysts believe the company is positioning itself for long-term growth, bolstered by its strong order book and execution capabilities.

Market performance and year-to-date gains

So far in 2024, KNR Constructions’ stock has recorded a gain of over 20%, surpassing the broader market’s performance, with the Nifty 50 index registering a 9% rise. This outperformance is indicative of investor confidence in the company's future prospects, underpinned by consistent financial and operational growth.

Overall, the stellar Q2FY25 results have reinforced KNR Constructions' reputation as a strong player within the infrastructure sector. The impressive figures, coupled with strategic initiatives, highlight the company’s commitment to driving value and maintaining a competitive edge. Investors and market participants will likely continue monitoring its developments closely, particularly as opportunities to buy shares online remain attractive amid its robust growth trajectory.