Shares of KNR Constructions (KNRCL) were frozen in a five percent upper circuit at Rs 255 on the BSE on Thursday after rating agency CRISIL upgraded its outlook on the firm to 'positive' from 'stable' and reaffirmed the rating at 'CRISIL AA-'.
As per CRISIL, the revision in outlook factors in expected improvement in scale of operations in KNRCL’s business risk profile with the sustenance of revenue growth of over 15 percent annually in the medium term while maintaining its healthy financial risk profile.
"The strong execution record along with healthy order book to revenue ratio of 4.5x times is expected to support revenue growth. Operating income reported a healthy growth of 20 percent in fiscal 2021 despite the lockdowns imposed by the government to curb the spread of the pandemic in the first half of the year," it added.
CRISIL further stated that this was supported by the execution of orders from the irrigation segment which is a lesser labour intensive work. Further, the operating margin remained at healthy levels of 20 percent and is expected to sustain in the future as well.
KNRCL has entered an agreement for the sale of three of its HAM projects.
"Realisation of sale proceeds in next 6-12 months with completion of these HAM assets this fiscal is expected to keep the dependence on borrowing low and help the company sustain its healthy financial profile. Timely conclusion of sale transaction of HAM projects in fiscal 2022 will remain a key monitorable," CRISIL further said.