Metrics cut 2
- Kusumunda mining project appointed date moved to Sep-26 (deferred from earlier expectation)
- Bhanfadi/Jharkhand mining project delayed ~9-10 months pending forest clearance (deferred)
Event Participants
Executives
2 K. Jalandhar Reddy, K. Venkata Ram Rao
Analysts
8 Bhavin Modi, Faisal Hawa, Nitin, Shravan Shah, Sudip Bora, Taj Srimaitra, Vaibhav Shah, Vasudev
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Order Book (incl. new wins) | ₹15,234 crores | Excl. recently won HAM + mining: ₹8,667 cr; split 38% road, 11% irrigation, 6% pipeline, 45% mining; 71% third-party, 29% captive HAM; executable in 3-3.5 yrs excl. mining |
| Consolidated Revenue | ₹587.9 crores | Q1 FY27; includes ₹76 cr one-off from SPV sale to Index Infra Trust |
| Standalone Revenue | ₹436.7 crores | Q1 FY27 |
| Consolidated EBITDA Margin | 16.4% | Includes ₹46 cr net one-off (₹76 cr revenue, ₹30 cr expenditure); recurring EBITDA margin ~5.5% per management |
| Consolidated Net Profit | ₹80.7 crores | Includes SPV divestment gains; standalone NP ₹282.3 cr captured divestment gains |
| Consolidated Debt | ₹1,975 crores | Down from ₹2,438 cr as of Mar-26 |
| Net Debt to Equity | 0.9x | vs 0.49x at Mar-26; standalone debt nil |
| Working Capital | 133 days | vs 78 days at Mar-26; increase driven by Telangana irrigation receivables |
| HAM Debtors | ₹178 crores | As of Jun-26 |
| Unbilled Order Book | ₹1,220 crores | ₹825 cr irrigation + ~₹400 cr others |
| Standalone Cash | ₹310 crores | Consolidated cash ₹435 cr |
Geographic & Segment Commentary
Road/EPC & HAM: 70% of Q1 revenue from HAM (annuity), 25% from EPC. Two new HAM projects (Chennai ECR and Telangana NHI) expected to achieve appointed date in Q3 FY27. NHAI awarded only 107 km industry-wide in Q1; Management confident on pipeline given ₹3.1 lakh crore FY27 budget allocation to MORTH (up 8%).
Irrigation: Only 3% of Q1 revenue (~₹30 cr run rate); ₹1,300 cr receivables outstanding on Telangana Package 4, with ₹825 cr unbilled revenue already recognized. Management expects ₹400-500 cr recovery in FY27 via 5-6 installment payments under discussion with Telangana government (includes ₹700-800 cr revised estimate pending Finance Ministry approval).
Mining: 45% of order book following Kusumunda Chhattisgarh win (₹3,361 cr, 8-year, 100% back-to-back EPC through 50:50 JV with Sushi Infra). Kusumunda to commence Sep-26 with ~₹150 cr revenue in FY27 and ₹400-500 cr in FY28; earlier Jharkhand mining project delayed ~9-10 months pending second-stage forest clearance.
Water Pipeline: ₹830 cr order book remaining; ₹7 cr revenue in Q1 FY27; back-to-back work with no unbilled exposure; ₹300-400 cr targeted in FY27 with balance in FY28.
Company-Specific & Strategic Commentary
SPV Monetization: Sold 100% stakes in KNR Ramgiri Infra (₹53 cr invested → ₹227 cr consideration) and KNRCON Limited (₹64 cr invested → ₹295 cr incl. ₹90 cr EPC claim) to Index Infra Trust, generating ₹46 cr net one-off in Q1 EBIT.
Diversification Strategy: Actively evaluating railway (₹10,134 cr FY27 railway allocation), metro/urban mobility (JV formed with NCC), and battery energy storage opportunities - but BESS bids so far went at "unhealthy" prices and are being pursued cautiously.
Capital Allocation: Buyback under board consideration; management holding back on distributions to reserve for equity commitments (₹210 cr additional equity for existing HAMs + ~₹510 cr for Chennai ECR/Telangana NHI) and mining capex.
Credit Rating: CRISIL reaffirmed long-term bank facilities at AA/Stable and short-term at A1+.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| FY27 Revenue | ₹2,200-2,300 crores | 10-15% growth over FY26 (~₹2,000 cr); driven by Q3-4 start of new HAMs and Kusumunda mining |
| FY28 Revenue | ₹3,000+ crores | All projects at full operational capacity |
| FY27 EBITDA Margin | 8-9% | Q3-Q4 at 11-12% on mining + HAM execution; Q1-Q2 subdued due to low execution |
| FY28 EBITDA Margin | 11-12% | Higher turnover and better operating leverage; 12-13% achievable |
| Order Inflow FY27 | ₹8,000-10,000 crores | Mix of NHAI, irrigation, and state infrastructure projects |
| Capex FY27 | ₹350-400 crores | Mining equipment-heavy (₹14 cr spent in Q1); ₹450 cr on Kusumunda + ₹200 cr on Bhanfadi if land clears |
| Mining Revenue FY27 | ~₹150 crores | Kusumunda only, starting Sep-26; +₹20-30 cr variance |
| Mining Revenue FY28 | ₹400-500 crores | Kusumunda alone; Bhanfadi adds ~₹500 cr/annum if started |
Risks & Constraints
| Risk | Context |
|---|---|
| Telangana Irrigation Receivables | ₹1,300 cr outstanding on Package 4; management pushing hard for 5-6 installments covering ₹650 cr; revised estimate ₹700-800 cr sanctioned by technical committee but needs Finance Ministry approval (5-6 months process). Management has committed to "sit there unless they write the check." |
| Mining Execution & Land Acquisition | Kusumunda faces monsoon delays (appointed date moved to Sep-26), Riddhi Village land not fully acquired; Bhanfadi mine requires second-stage forest clearance (~9-10 months). Equipment delivery (110 dumpers) only complete by Nov-end 2026. |
| Equipment Capex & Depreciation | ₹500-600 cr equipment deployment for ₹400 cr annual mining turnover; heavy depreciation despite 2-year buyback cycles (75% residual via Caterpillar/Komatsu) for dumpers, 5-year cycles for coal equipment, 8-year for surface miners (₹13 cr each). Management confident of 6+ PAT level based on bid analysis and peer data. |
| Sector Awarding Slowdown | NHAI awarded only 107 km in Q1 FY27 and industry execution moderated to 638 km; FY27 plan of 2,444 km and ₹1.8 lakh crore pipeline provides visibility, but near-term awarding remains measured. |
| Working Capital Pressure | Working capital days rose from 78 to 133 at Jun-26; management chasing collections aggressively given cash needs for mining capex. |
Q&A Highlights
FY27/FY28 Execution and Margin Trajectory
- Question: How do we see execution growth for FY27 and FY28, and what are the margin targets? (Vaibhav Shah, JM Financial)
- Answer: FY27 revenue will cross ₹2,200-2,300 cr (10-15% yoy growth) as ECR Chennai and Telangana NHI HAM projects start in Q3 and Kusumunda mining begins next month; FY28 should cross ₹3,000 cr with all projects operational. FY27 average EBITDA around 8-9% (Q3-Q4 at 11-12%), FY28 at 11-12% and possibly 12-13% at full capacity. (K. Venkata Ram Rao, GM Finance)
Telangana Irrigation Recovery
- Question: What are the expectations from the Telangana government on the irrigation outstanding? (Vaibhav Shah, JM Financial)
- Answer: Positive discussions with Finance Ministry and Irrigation Department this week, driven by Hyderabad water crisis urgency. Government proposed 10 installments for the ₹650 cr outstanding; KNR pushed back saying further delay would hurt interest costs, and government agreed to 5-6 installments of ₹80-90 cr per month. Management expects ₹400-500 cr in FY27; revised estimate of ₹700-800 cr cleared by technical committee needs Finance Ministry approval, likely in 5-6 months. (K. Jalandhar Reddy, Executive Director)
Mining Capex and Operating Model
- Question: What is the total capex required for both mining projects, and how should we model depreciation and margins? (Shravan Shah, Dolat Capital)
- Answer: Kusumunda requires ₹500-600 cr equipment (surface miners, dumpers, excavators); Bhanfadi (Jharkhand) ₹300-400 cr, given no high-capacity equipment restriction and ability to redeploy existing road equipment. Q1 spend was ₹14 cr; FY27 Kusumunda capex ~₹450 cr (possibly +₹200 cr on Bhanfadi if land clears). Dumpers on 2-year buyback cycles (Caterpillar/Komatsu guarantee ~75% return), reducing maintenance costs; surface miners (₹13 cr each, 4-5 required) held for 8 years. Mining margins modeled at 6+ PAT level. (K. Venkata Ram Rao, GM Finance)
Mining Revenue Split and Order Book Dilution Concern
- Question: Mining is now 45% of the order book - but what revenue does that actually translate to? (Faisal Hawa, HG Awar Company)
- Answer: The ₹3,300 cr Kusumunda award over 8 years yields only ₹350-400 cr annual turnover; the earlier mining project is ~₹3,500 cr (75% share) over 5 years. Revenue will be much lower vs. order book value. Management is keeping cash reserved for equity and capex commitments rather than dividends - buyback is under board consideration. (K. Venkata Ram Rao, GM Finance)
Unbilled Order Book and Project-Specific Details
- Question: What is the unbilled portion within the order book, and how is the Somar Paddu position? (Bhavin Modi, Anand Lathi)
- Answer: Total unbilled in order book is ~₹1,220 cr (₹825 cr irrigation + ~₹400 cr rest). Somar Paddu unexecuted order book is now ₹100 cr, down from ₹153 cr. Project-wise: Khajagora-Pralaya ₹459 cr, MGI-Manikonda ₹83 cr, Vijayanshan flyover ₹72 cr (project yet to start). (K. Venkata Ram Rao, GM Finance)
Mysuru Kushalnagar Project Delay
- Question: Why has the Mysuru-Kushalnagar package not picked up execution? (Bhavin Modi, Anand Lathi)
- Answer: Land was obstructed by locals demanding service roads; government vacated the area only 2 months back and handed over full land. Execution has now heated up, targeting partial COD by December for the 30-40% available land and full completion by April-May 2027. (K. Jalandhar Reddy, Executive Director)
Q1 One-Off and Segment Revenue Mix
- Question: The 15% Q1 EBITDA margin seems high - was there a one-off, and how do revenue segments break down? (Vasudev, Nuama)
- Answer: Yes, ₹76 cr one-off revenue with ₹30 cr expenditure (net ₹46 cr in EBIT) from the SPV sale to Index Infra Trust; recurring EBITDA margin ~5.5%. Q1 segment mix: irrigation 3%, HAM 70%, EPC 25%. FY27 capex ~₹350-400 cr, including mining equipment. Standalone debt is nil; consolidated debt ₹1,975 cr; consolidated cash ₹435 cr. (K. Venkata Ram Rao, GM Finance)
Diversification into Metro and Railway
- Question: Are we bidding for elevated metro projects, and any JV arrangements with large players? (Bhavin Modi, Anand Lathi)
- Answer: Bid for an elevated metro project but went at "unhealthy" prices and was subsequently cancelled. Formed a JV with NCC for metro work and are selectively pursuing southern projects with private partners - the rainy season and extended timelines make north-India expressway projects difficult to deliver on time, and the company lacks expressway construction experience credentials for some UP/MP tenders. (K. Jalandhar Reddy/ K. Venkata Ram Rao)
Key Takeaway
KNR Constructions reported Q1 FY27 consolidated revenue of ₹587.9 cr (₹436.7 cr standalone), with EBITDA margin of 16.4% including a ₹46 cr net one-off from the sale of two SPVs to Index Infra Trust (recurring ~5.5%). The order book stands at ₹15,234 cr, now 45% mining after the Kusumunda Chhattisgarh win (₹3,361 cr, 8-year, back-to-back EPC via 50:50 JV), plus ~₹1,500 cr L1 pending LOA. Management guided FY27 revenue of ₹2,200-2,300 cr at 8-9% EBITDA (Q3-Q4 at 11-12%), and FY28 revenue of ₹3,000+ cr at 11-12% EBITDA, with ₹8,000-10,000 cr order inflows targeted. Material watch items include recovery of ₹1,300 cr Telangana irrigation receivables (₹400-500 cr expected in FY27), ₹350-400 cr mining capex and associated depreciation, and execution ramp-up of two new HAM projects and the mining portfolio through H2 FY27.