KNR Constructions reported a quarterly profit uplift driven by one-off asset sales, while focusing on debt reduction, expansion into mining and infrastructure projects, and exploring diversification into railways and battery storage.
KNR Constructions said its first-quarter earnings were lifted by a one-off gain on asset sales, masking a weaker underlying performance as the Indian infrastructure group pushes ahead with a wider balance-sheet clean-up and a more ambitious growth plan.
The company reported an EBITDA margin of 15% in the quarter, but management said that included a ₹46 crore gain from the sale of two highway special purpose vehicles. Excluding that item, the underlying margin was about 5.5%, well below its full-year target of 8% to 9%. In the earnings call transcript, finance executive K. Ram Rao said KNR is aiming for revenue of ₹2,200 crore to ₹2,300 crore in FY27, rising to more than ₹3,000 crore in FY28 as newer projects move into full execution. The company is also targeting EBITDA margins of 11% to 12% in FY28.
KNR has been selling down mature road assets to reduce leverage. BusinessUpturn reported that KNR Ramagiri Infra was sold to Indus Infra Trust for ₹227.45 crore, while KNR Palani Infra fetched ₹205.05 crore, with the latter deal also delivering an upstream cash surplus of ₹90 crore to the parent. The earnings call said the two disposals generated total proceeds of ₹522 crore, helping to strengthen the balance sheet. Management said consolidated debt had fallen to ₹1,975 crore at the end of June from ₹2,438 crore in March, with the net debt-to-equity ratio at 0.9.
The company is now leaning more heavily on mining and fresh highway awards. Management said the order book stood at ₹15,234 crore, with mining making up the largest share, and it is targeting order inflows of ₹8,000 crore to ₹10,000 crore in FY27. It is also preparing for new mining work at Kusmunda and Banhardih, alongside two hybrid annuity model road projects in Chennai and Telangana. The CFO said the Telangana irrigation receivables remain a major focus, with talks under way over a possible phased recovery of about ₹650 crore. KNR also said it is assessing diversification into railways, metros and battery storage, although it remains selective after earlier bid disappointments.
The company’s near-term challenge is execution. Management said the Mysuru-Kushalnagar project now has full land availability, and it is seeking to achieve completion for the available section by December 2026, with full completion expected by April or May 2027. Even so, KNR expects profitability to improve as newer projects ramp up, helped by a stronger revenue mix and the cash released from asset monetisation.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
