KNR Constructions Ltd, a Hyderabad-based infrastructure powerhouse, is capturing investor attention with a significant new contract and a surging stock price. On June 25, 2025, the company announced a massive ₹4,800 crore coal mining project in Jharkhand, sparking a 9% rally in its shares. As India’s infrastructure sector continues to thrive, KNR’s strategic moves and solid financial position it as a stock to watch. Let’s explore the company’s recent performance, the impact of its latest order, and what investors should consider moving forward.
Stock Price Surge: Momentum Driven by New Opportunities
KNR Constructions’ stock has been a dynamic performer, reflecting both market trends and company milestones. On June 25, 2025, shares closed at ₹230.85 on the NSE, up 8.76% from ₹212.25, fueled by the announcement of the ₹4,800 crore coal mining contract. This order, where KNR holds a 74% stake in a joint venture, is expected to contribute ₹710 crore annually over five years, adding significant revenue potential.
Over the past year, the stock has faced volatility, declining 18.6% and touching a 52-week low of ₹192.55 in April 2025. However, it remains well below its 52-week high of ₹415.40 from July 2024, suggesting potential for further gains if momentum persists. In 2025, the stock has risen 21.4% year-to-date, outpacing broader market indices. With a price-to-earnings (P/E) ratio of 5.96 and a price-to-book (P/B) ratio of 1.71, KNR appears undervalued compared to peers, making it an appealing option for value investors.
Financial Snapshot: Growth with Challenges
KNR Constructions has shown resilience despite hurdles, including a temporary ban on bidding for National Highways Authority of India (NHAI) road projects due to a structural issue in Kerala. For the fiscal year ending March 31, 2025 (FY25), the company reported a consolidated net profit of ₹1,001 crore, up 28.9% from ₹777 crore in FY24. Revenue grew 7.3% to ₹4,753 crore, driven by strong execution in road, irrigation, and urban infrastructure projects. However, the fourth quarter (Q4 FY25) saw a 60.6% drop in net profit to ₹139 crore and a 31% decline in sales to ₹975 crore, reflecting project delays and the NHAI ban’s impact.
Earlier quarters showcased strength, with Q2 FY25 delivering an 87% year-on-year revenue increase to ₹19.4 billion and a 306% surge in profit to ₹5.8 billion, thanks to improved margins. Q3 FY25 saw a 78% profit rise to ₹2.5 billion despite an 8% revenue dip. The company’s order book stands at ₹5,052 crore, including ₹2,561 crore in road projects and ₹2,491 crore in irrigation and pipeline contracts, ensuring revenue visibility. However, rising working capital days (from 114 to 166) signal potential cash flow concerns that investors should monitor.
The Big Win: A Leap into Coal Mining
The ₹4,800 crore coal mining contract from an NTPC unit in Jharkhand marks a bold step for KNR into a new sector. With a 74% stake in the joint venture, KNR will develop and operate a coal block over five years, generating significant annual revenue. This move diversifies the company’s portfolio beyond traditional road and irrigation projects, reducing reliance on NHAI contracts amid the bidding ban. The order adds roughly 17% to FY25 revenue, bolstering growth prospects.
KNR is also expanding into metro, water, railways, and tunnel projects, aligning with India’s infrastructure push. Analysts expect strong order inflows post-elections, with revenue projected to grow at an 11% annual rate through FY26, supported by stable operating margins of 17-18%.
Investor Guidance: Balancing Opportunity and Risk
KNR Constructions offers a compelling case for investors, but risks require careful consideration. Here’s a breakdown of what to do:
Why Consider Investing:
- Attractive Valuation: A P/E of 5.96 and P/B of 1.71 suggest KNR is undervalued compared to peers, offering a value opportunity.
- Robust Order Pipeline: The coal mining contract and a ₹5,052 crore order book provide strong revenue visibility.
- Diversification: Entry into mining and non-road projects mitigates risks from the NHAI ban.
- Analyst Confidence: Experts project a target price of ₹287, implying a 24% upside, with some estimates as high as ₹350.
Key Risks:
- NHAI Ban: Restrictions on road project bidding could limit growth in a core segment.
- Q4 Weakness: Recent profit and revenue declines highlight execution and cost challenges.
- Volatility: The stock’s 18.6% annual drop reflects market and company-specific risks.
- Cash Flow Concerns: Increasing working capital days could strain liquidity.
Action Plan:
- Long-Term Investors: Accumulate shares on price dips, leveraging KNR’s undervaluation and growth potential. The coal mining order and diversification make it a strong bet on India’s infrastructure boom.
- Short-Term Traders: Capitalize on the recent 9% rally but monitor resistance at ₹241 and support at ₹219 for strategic trades.
- Risk Mitigation: Track updates on the NHAI ban, quarterly performance, and cash flow trends. Diversifying into other infrastructure stocks can balance sector risks.
Looking Ahead: A Bright Future with Vigilance
KNR Constructions Ltd is well-positioned to ride India’s infrastructure wave, with its recent coal mining order and diversified portfolio signaling strong growth potential. Despite challenges like the NHAI ban and Q4 setbacks, the company’s undervalued stock, solid order book, and strategic expansion make it a promising investment. Investors should approach with cautious optimism, seizing the current valuation as an opportunity while staying alert to execution and market risks. As KNR builds on its infrastructure legacy, it remains a stock to watch in 2025.
DISCLAIMER
______________
“BrightStake” is only an Educational Platform and is not registered under any SEBI Regulations. All Information on this page is for Educational and Entertainment purposes only. Our content does not constitute any Trading or Investment advice. We make no representation of the Timeliness, Accuracy, Profitability, or Suitability of any share on this Website, and we cannot be held liable for any Irregularity or Inaccuracy. Our research is solely for educational purposes, so please build your knowledge with us and use your strategy for investment.
