KNR Constructions Limited Q4 FY26 Earnings Conference Call Summary

Management Participants

  • Mr. K. Jalandhar Reddy – Executive Director
  • Mr. K. Venkata Ram Rao – General Manager, Finance and Accounts

Industry Landscape and Sector Update

  • Road infrastructure sector witnessed measured pace during FY26, particularly in project awarding.
  • NHAI awarded 3,100 km of projects in FY26, down approximately 22% YoY and below initial target of 7,500 km.
  • Moderation driven by extended project appraisal timelines, land acquisition challenges, and emphasis on project preparedness.
  • NHAI constructed around 5,300 km of national highways during FY26, surpassing internal target of 5,000 km.
  • Government commitment to infrastructure-led growth remains strong with focus on expressways, economic corridors, and logistic infrastructure.
  • New opportunities emerging in mining development, irrigation, ropeways, metro terminal projects, urban mobility, and rail connectivity.
  • Commodity input volatility observed due to geopolitical tensions impacting crude oil and bitumen prices.
  • Ministry of Road Transport and Highway reduced price adjustment cycle from 3 months to 1 month for faster pass-through of construction material cost fluctuations.
  • NHAI monetized approximately ₹28,000 crore through InvIT and TOT transactions in FY26.
  • FY27 outlook: MoRTH expected to construct 9,000-9,500 km; sector benefits from strong policy support and sustainable public capex.

Company-Specific Updates

HAM Project Progress (as of March 31, 2026):

  • Ramanattukara to Valanchery: 99.4% complete
  • Valanchery to Kappirikkad: 98.3% complete
  • Chittor to Thatchur: 97.4% complete
  • Magadi to Somwarpet: 91.3% complete
  • Marripudi to Somvarappadu: 77.1% complete
  • Mysore to Kushalnagar Package IV: 15.5% complete
  • Mysore to Kushalnagar Package V: 12.2% complete

Equity Investment in HAM Projects:

  • Total revised equity requirement: ₹952.17 crore
  • Already invested: ₹734.24 crore
  • Additional equity requirement: ₹217.93 crore (₹170 crore in FY27, ₹47.93 crore in FY28)

New Project Awards in Q4 FY26:

1. Tamil Nadu State Highway Authority Project:

  • Development of full and elevated corridor from Thiruvanmiyur to Uthandi on State Highway 49
  • Bid project cost: ₹2,163 crore
  • Construction period: 3 years
  • Operation period: 5 years
  • SPV: KNR Mahabalipuram Infra Private Limited incorporated
  • Concession agreement executed

2. NHAI Project:

  • Laning of NH-167 from Gudebellur to Mahabubnagar in Telangana
  • Project value: ₹1,734 crore
  • Construction period: 2 years
  • Operation period: 15 years
  • SPV: KNR Manyamkonda Infra Private Limited incorporated
  • Concession agreement executed

Tentative Equity Requirement: Approximately ₹510 crore for both new HAM projects

EPC Project Awards:

1. Greater Hyderabad Municipal Corporation: Construction of 4-lane unidirectional flyover at Rasoolpura, Telangana (₹50 crore, 24-month completion)

2. Hyderabad Growth Corridor: Widening and strengthening of pipeline road from Shankarpally Road, Telangana (₹83 crore, 9-month execution)

Monetization Activity:

  • Transferred entire equity shareholding in KNR Palani Infra Private Limited to Indus Infra Trust
  • Total investment in SPV: ₹64.40 crore (equity + sub-debt)
  • Consideration received: ₹205.05 crore
  • SPV upstreamed ₹90 crore cash surplus to company
  • Expected to close one project by June 2026 and two projects by September 2026

Order Book Position (as of March 31, 2026)

  • Total order book: ₹8,672 crore (excluding recently won HAM projects)
  • Including HAM projects: ₹11,903 crore
  • Segment-wise distribution:
  • Roads: 49%
  • Irrigation: 14%
  • Pipeline: 7%
  • Mining: 30%
  • Client-wise distribution:
  • Third-party clients: 61%
  • Captive HAM projects: 39%
  • Third-party breakdown:
  • State government: 59%
  • Central government: 1%
  • Private players: 1%
  • Execution timeline: 3-3.5 years (excluding mining projects)

FY27 Order Inflow Guidance: Targeting ₹8,000-10,000 crore comprising mix of NHAI projects, irrigation projects, mining, and state government infrastructure work

Financial Performance

Standalone Q4 FY26:

  • Revenue: ₹535 crore
  • EBITDA: ₹28 crore
  • EBITDA margin: 5.3%
  • Net profit: ₹19 crore

Standalone FY26:

  • Revenue: ₹2,097 crore
  • EBITDA: ₹178 crore
  • EBITDA margin: 8.5%
  • Net profit: ₹116 crore

Consolidated Q4 FY26:

  • Revenue: ₹696 crore
  • EBITDA: ₹169 crore
  • EBITDA margin: 24.3%
  • Net profit: ₹106 crore

Consolidated FY26:

  • Revenue: ₹2,698 crore
  • EBITDA: ₹711 crore
  • EBITDA margin: 26.4%
  • Net profit: ₹437 crore

Balance Sheet and Capital Structure

  • Working capital days: 78 days (vs. 93 days as of March 2025)
  • Consolidated debt: ₹2,438 crore (vs. ₹1,847 crore as of March 2025)
  • Net debt to equity (consolidated): 0.49x (vs. 0.41x as of March 2025)

Management Commentary and Guidance

Revenue Guidance:

  • FY27: Targeting ₹2,000+ crore (standalone)
  • FY28: Targeting ₹3,000+ crore (standalone)

Margin Outlook:

  • Expecting overall EBITDA margins around 10-11% due to competitive market conditions
  • Recent Mahabubnagar project targeted at 11-12% EBITDA margin
  • Chennai project expected to be more comfortable

Mining Project Update:

  • Banhardih mine received F1 forest clearance for 850 hectares
  • Awaiting Gram Sabha meeting completion
  • Expected to start in 7-8 months (Q4 FY27)
  • FY28 revenue expectation: ₹300-400 crore
  • Peak revenue potential: ₹1,000 crore in fifth year
  • Capex requirement: ₹350 crore to be funded through internal accruals and debt

Receivables Update:

  • Approximately ₹1,400-1,450 crore outstanding from Telangana government
  • ₹670 crore pending specifically from Kaleshwaram Package 4
  • Expecting resolution in 2-3 months

Segment-wise Revenue Breakdown (Q4 FY26):

  • HAM: 42%
  • Road EPC: 33%
  • Back-to-back EPC: 17%
  • Irrigation: 8%

FY26 Execution:

  • Pipeline work: ₹270 crore
  • Irrigation work: ₹340 crore

FY27 Execution Targets:

  • Pipeline work: ₹350-400 crore
  • Irrigation work: ₹200-250 crore (Package 3 only)

New HAM Project Timeline:

  • ECR Chennai project: Financial closure expected June 2026, appointment in 2 months, contribution from Q3/Q4 FY27
  • Telangana project: Contribution expected from Q4 FY27
  • FY28 execution target from both HAMs: ₹1,000-1,200 crore

Diversification Initiatives:

  • Railway sector: Bidding for projects (~₹700-800 crore)
  • Data centers: Exploring opportunities in Hyderabad with potential partners
  • Solar: Focusing on large-scale projects (500+ MW)
  • Land bank: Evaluating utilization for solar or quarry development

Claims Recognition:

  • Recognized claims of ₹162.97 crore from clients on settlement
  • Associated costs of ₹135.52 crore
  • Net impact of ~₹27 crore included in income from operations

Capex:

  • FY26 capex: ~₹4 crore
  • FY27 target: ₹200-250 crore (for mining and ECR Chennai project)

Q&A Session Highlights

  • Discussed challenges in Mysore-Kushalnagar projects due to land issues, now resolved with police protection
  • Pipeline of submitted bids: ~₹4,000 crore (mining + Chennai ORR)
  • Additional tenders submitted but not opened: ₹3,000-4,000 crore
  • GHMC tenders: ₹1,400 crore
  • Maintaining equipment and staff despite lower turnover impacting overheads
  • Exploring joint ventures for high-speed railway projects