18 November 2023 India | Infrastructure | Result Update

KNR Constructions | BUY

Focus on diversification to support growth
KNR Constructions’ (KNR) 2QFY24 PAT at INR 1bn was in-line with JMFe of INR 991mn Ashish Shah
(consensus: INR 947mn). Reported EBITDA margins declined by 150bps YoY on adjusted base ashish.shah@jmfl.com | Tel: (91 22) 66303085
to 17.7% (JMFe: 18%). After adjusting for one-offs of c.INR 227mn, adjusted margins were Vaibhav Shah
strong at 20%. Order backlog weakened to INR 74.5bn (1.9x TTM revenue) due to nil inflows vaibhav.shah@jmfl.com | Tel: (91 22) 66303068

in YTD (L1 in 2 irrigation orders). KNR has lowered its order inflow guidance from INR 40- Nilesh Soni
nilesh.soni@jmfl.com | Tel: (91 22) 66303372
50bn to INR 30-40bn. KNR is exploring metro, railways, tunnels and mining verticals to widen
its opportunity base. Highways bid pipeline at c.INR 900bn continues to remain strong but
opening of bids is delayed. While FY24 outlook is muted, we expect improved
revenue/earnings growth in FY25 by expected order wins. Maintain BUY with revised SOTP
based price target of INR 330 (valuing EPC business at 15x Sept-25 EPS and assets at INR 40).
Recommendation and Price Target
 2QFY24 earnings in-line with estimates: Revenue/EBITDA grew by 14%/1% YoY to INR Current Reco. BUY
9.4bn/INR 1.7bn (JMFe: INR 9bn/INR 1.6bn). Reported EBITDA margins declined by Previous Reco. BUY
150bps YoY on adjusted base to 17.7% (JMFe: 18%). One-offs (operating in nature but Current Price Target (12M) 330
Upside/(Downside) 17.3%
one-off in terms of timing) include i) write-off of INR 127mn related to de-scoping of
Previous Price Target 300
works in Tirumala HAM project and ii) donation via electoral bonds of INR 100mn. Change 10.3%
Adjusting for these one-offs, EBITDA margins stood at 20%.
Key Data – KNRC IN
 Order backlog weakened due to nil inflows in YTD; to diversify to widen opportunities: Current Market Price INR282
KNR’s order backlog has weakened to INR 74.5bn (1.9x TTM revenue) as on Sept-23. Market cap (bn) INR79.2/US$1.0
Since YTD inflows are nil, KNR has lowered its inflow guidance from INR 40-50bn to INR Free Float 49%
30-40bn. KNR had bid for 4 irrigation projects and is L1 in two irrigation projects. KNR is Shares in issue (mn) 281.2
Diluted share (mn) 281.2
exploring metro, railways, tunnels and mining verticals to widen its opportunity base.
3-mon avg daily val (mn) INR288.1/US$3.5
Highways bid pipeline at c.INR 900bn continues to remain strong but bids are getting 52-week range 291/226
delayed. KNR is evaluating bids for 3 railway projects (track works, tunneling etc) worth Sensex/Nifty 65,795/19,732
INR 32bn+, mining project of INR 120bn in Jharkhand and few irrigation projects in INR/US$ 83.3

Maharashtra, Karnataka, Jharkhand, UP and MP.

Price Performance
 Irrigation receivables moderate; targets to monetize 4 HAMs in FY24: Irrigation % 1M 6M 12M
Absolute 2.0 16.7 14.2
receivables from the Telangana government moderated from INR 6.9bn in Aug-23 to INR
Relative* 3.0 9.2 7.1
6.5bn currently. KNR has a portfolio of 8 HAM assets (5 old, 3 new) with total equity * To the BSE Sensex
requirement of INR 10bn of which it has invested INR 4.6bn till Sept-23 while remainder
INR 5.4bn is to be invested over FY24-27E. It would be funded through a mix of internal
accruals and monetization proceeds of HAM assets. KNR is in advance talks with Cube
Highways to monetize 4 HAM assets.

 Maintain BUY with SoTP based revised price target of INR 330: KNR trades at 13.9x
FY26E EPS. We value KNR’s EPC business at INR 290/share based on 15x Sept’25E
standalone EPS. We value the investments in BOT and HAM assets at INR 40/share on P/B
basis. KNR has historically enjoyed premium valuations but our target multiple is at only a
marginal premium to peers, reflecting moderation in earnings growth (12% CAGR over
FY23-26E) and return ratios (14.4% in FY26E vs. 16.2% in FY23). Maintain BUY with an
SOTP-based revised price target of INR 330.

Financial Summary (INR mn)

Y/E March FY22A FY23A FY24E FY25E FY26E
Net Sales 32,726 37,192 40,115 46,436 51,080
Sales Growth (%) 21.1 13.6 7.9 15.8 10.0 JM Financial Research is also available on:
EBITDA 6,777 6,971 7,243 8,379 9,186 Bloomberg - JMFR <GO>,
EBITDA Margin (%) 20.7 18.7 18.1 18.0 18.0
Adjusted Net Profit 3,604 4,058 4,490 5,183 5,681
Thomson Publisher & Reuters,
Diluted EPS (INR) 12.8 14.4 16.0 18.4 20.2 S&P Capital IQ, FactSet and Visible Alpha
Diluted EPS Growth (%) 31.1 12.6 10.6 15.4 9.6
ROIC (%) 17.1 16.2 15.3 15.4 14.7 Please see Appendix I at the end of this
ROE (%) 17.5 16.3 15.2 15.1 14.4
report for Important Disclosures and
P/E (x) 21.3 17.4 17.6 15.3 13.9
P/B (x) 3.4 2.6 2.5 2.2 1.9 Disclaimers and Research Analyst
EV/EBITDA (x) 11.0 9.8 10.5 9.1 8.3 Certification.
Dividend Yield (%) 0.1 0.2 0.2 0.2 0.4
Source: Company data, JM Financial. Note: Valuations as of 17/Nov/2023

JM Financial Institutional Securities Limited

KNR Constructions 18 November 2023

Exhibit 1. Quarterly standalone results

INR mn 2QFY23 3QFY23 4QFY23 FY23 1QFY24 2QFY24 2QFY24E Variance (%) FY24E FY25E FY26E
Net Sales 8,228 8,302 11,756 37,192 9,296 9,415 9,000 4.6% 40,115 46,436 51,080
EBIDTA 1,642 1,560 2,119 6,971 1,733 1,663 1,620 2.6% 7,243 8,379 9,186
EBIDTA margin (%) 20.0 18.8 18.0 18.7 18.6 17.7 18.0 18.1 18.0 18.0
Other income 76 59 96 321 71 50 80 -37.3% 274 312 319
Depreciation 366 381 401 1,474 283 311 315 -1.4% 1,261 1,472 1,590
Interest 84 65 80 298 50 58 60 -3.6% 250 293 323
PBT 1,267 1,173 1,735 5,519 1,470 1,344 1,325 1.5% 6,006 6,926 7,592
Tax 359 318 449 1,461 367 346 334 3.6% 1,516 1,743 1,911
Effective tax rate (%) 28.3 27.1 25.9 26.5 25.0 25.7 25.2 25.2 25.2 25.2
PAT 908 855 1,286 4,058 1,103 999 991 0.7% 4,490 5,183 5,681
Extra-ordinary items 167 763 - 930 - - - - - -
Reported PAT 1,076 1,618 1,286 4,988 1,103 999 991 0.7% 4,490 5,183 5,681

YoY growth (%)

Net sales 8.9 8.3 16.3 13.6 4.4 14.4 9.4 7.9 15.8 10.0
EBITDA (2.0) (1.8) 1.9 2.9 5.0 1.3 (1.3) 3.9 15.7 9.6
Other income (28.1) (25.0) (48.3) (23.1) (22.1) (33.8) 5.6 (14.6) 14.0 2.1
Interest 14.5 6.3 0.5 9.5 (13.3) (15.2) (14.0) (14.5) 16.7 8.0
Depreciation 16.8 2.5 32.8 8.6 (27.5) (31.2) (28.6) (16.2) 17.3 10.3
PBT (8.8) (5.8) (4.0) (1.0) 9.3 6.1 4.6 8.8 15.3 9.6
PAT (4.6) 7.8 14.0 12.6 9.3 9.9 9.1 10.6 15.4 9.6
Reported PAT 12.9 60.6 14.0 30.7 9.3 (7.2) (7.8) (10.0) 15.4 9.6
Source: Company, JM Financial

Exhibit 2. Key assumptions

INR mn FY22 FY23 FY24E FY25E FY26E
Order inflows 10,728 18,143 40,000 55,000 65,000
EBITDA Margins 20.7% 18.7% 18.1% 18.0% 18.0%
Equity investments# 1,562 1,395 2,564 3,113 651
Capex 2,374 1,209 1,200 1,400 1,800
NWC days* 111 142 140 135 135
Source: Company, JM Financial; *: ex of free cash and L&A to subsidiaries/JVs; #: gross investments

Exhibit 3. Backlog of INR 74.5bn focused in five southern states Exhibit 4. Highways account for 79% of Sept-23 order backlog

Irrigation
21%
Karnataka
28%

AP &
Telangana
39%

Road - HAM
58%
Road - EPC
21%

Kerala
Tamil Nadu 24%
9%

Source: Company, JM Financial Source: Company, JM Financial

JM Financial Institutional Securities Limited Page 2

KNR Constructions 18 November 2023

Exhibit 5. Telangana irrigation receivables stood at INR 6.5bn as on Nov’23 (71% of TTM irrigation revenue)

Telangana irrigation receivables (INR mn) Average levels of receivables (INR mn)

10,000
9,000
8,500 8,500
7,700
8,000 7,400
6,800 7,000 6,900
6,500 6,500 6,500 6,500 6,500
5,900 5,900
6,000
4,800 5,000

4,000
2,900

2,000

-
Jun-20 Sep-20 Nov-20 Feb-21 May-21 Aug-21 Nov-21 Dec-21 Mar-22 May-22 Jul-22 Aug-22 Nov-22 Feb-23 Mar-23 May-23 Aug-23 Nov-23

Source: Company, JM Financial

Exhibit 6. Irrigation segment revenue contribution to reduce to 24%/21% in FY25E/26E

INR mn FY24E revenue FY25E revenue FY26E revenue
Highways 32,115 35,470 40,583
Share of total revenue 80% 76% 79%
Irrigation 8,500 10,967 10,498
Share of total revenue 21% 24% 21%
Total revenues 40,115 46,436 51,080
Source: Company, JM Financial

Exhibit 7. SoTP based valuation of INR 330

Business Rationale Value Multiple (x) Value Value per share (INR)
KNR Standalone PEx avg FY25-26E EPS 5,432 15.0 81,476 290
Equity investment in BOT/annuity/HAM road assets
Muzaffarpur P/Bv (x) 903 1.0 903 3
Equity investment in HAMs 9,069 10,535 37
- 5 old HAMs P/Bv (x) 7,329 1.2 8,794
- 3 new HAMs P/Bv (x) 1,302 1.0 1,302
- HAMs yet to be won P/Bv (x) 439 1.0 439
Sub-Total 9,973 11,439 41
Target price 92,915 330
Source: Company, JM Financial

Key conference call takeaways

 FY24 guidance: Revenue: c.INR 41-42bn in FY24 (FY23: INR 37bn); Order inflows: INR 30-
40bn (earlier: INR 40bn+; YTD: nil); EBITDA margins: may reduce as revenue contribution
kicks in from few low margin EPC projects.

 Irrigation: L1 in two irrigation projects. Receivables moderates from INR 6.9bn in Aug-23
to INR 6.5bn currently. O/s irrigation backlog at INR 16bn, expects revenue of INR 4-4.5bn
in 2HFY24 and remainder in FY25E.

 Bid pipeline: Highways: INR 900bn but getting delayed; Railways: INR 32bn+ (tunnel +
structural works); Mining : INR 120bn (12 year project); also bidding for metro projects.

 Investments in HAMs: Pending equity at INR 5.35bn to be invested over FY24-27E.

 Monetization: Talks at advance stages with Cube Highways for monetizing 4 HAM assets.
Remaining assets would be monetized post completion of construction.

JM Financial Institutional Securities Limited Page 3

KNR Constructions 18 November 2023

Exhibit 8. KNR’s portfolio of eight HAM assets

Project (INR mn) Awarding authority State Length (km) FC/ AD Status BPC Total Debt Total Equity Invested equity* Debt drawn*

Magadi Somwarpeth KSHIP Karnataka 166 Received 11,445 2,570 1,221 1,030 1,200

Oddanchatram - Madathukulam NHAI Tamil Nadu 45 Received 9,200 3,170 805 644 2,450

Ramanattukara to Valanchery NHAI Kerala 40 Received 23,675 8,641 2,250 1,169 606

Valanchery to Kappirikkad NHAI Kerala 37 Received 21,400 7,753 2,092 1,222 -

Chittor Thatchur NHAI AP & TN 35 Received 10,415 3,858 962 504 -

Marripudi to Somavarappadu NHAI AP 29 Awaited 6,650 3,470 875 1 -

Ramnathapura Terakanambi NHAI Karnataka 27 Awaited 6,500 3,269 817 1 -

Yalachahalli to KR Nagara NHAI Karnataka 19 Awaited 6,903 3,506 895 1 -

Total of above 398 96,188 36,236 9,915 4,571 4,256

Source: Company, JM Financial; *: as on Sept-23

JM Financial Institutional Securities Limited Page 4

KNR Constructions 18 November 2023

Financial Tables (Standalone)

Income Statement (INR mn) Balance Sheet (INR mn)
Y/E March FY22A FY23A FY24E FY25E FY26E Y/E March FY22A FY23A FY24E FY25E FY26E
Net Sales 32,726 37,192 40,115 46,436 51,080 Shareholders’ Fund 22,420 27,343 31,698 36,725 42,065
Sales Growth 21.1% 13.6% 7.9% 15.8% 10.0% Share Capital 562 562 562 562 562
Other Operating Income 0 0 0 0 0 Reserves & Surplus 21,857 26,780 31,135 36,163 41,503
Total Revenue 32,726 37,192 40,115 46,436 51,080 Preference Share Capital 0 0 0 0 0
Cost of Goods Sold/Op. Exp 25,324 29,539 32,137 37,207 40,958 Minority Interest 0 0 0 0 0
Personnel Cost 0 0 0 0 0 Total Loans 0 3 0 0 0
Other Expenses 625 681 735 851 936 Def. Tax Liab. / Assets (-) -1,183 -1,229 -1,229 -1,229 -1,229
EBITDA 6,777 6,971 7,243 8,379 9,186 Total - Equity & Liab. 21,237 26,116 30,468 35,496 40,836
EBITDA Margin 20.7% 18.7% 18.1% 18.0% 18.0% Net Fixed Assets 5,102 4,838 4,777 4,705 4,914
EBITDA Growth 26.5% 2.9% 3.9% 15.7% 9.6% Gross Fixed Assets 15,729 17,120 18,320 19,720 21,520
Depn. & Amort. 1,346 1,474 1,261 1,472 1,590 Intangible Assets 0 0 0 0 0
EBIT 5,432 5,497 5,982 6,907 7,596 Less: Depn. & Amort. 10,833 12,307 13,568 15,040 16,630
Other Income 417 321 274 312 319 Capital WIP 206 25 25 25 25
Finance Cost 274 298 250 293 323 Investments 4,828 5,244 7,808 11,360 14,266
PBT before Excep. & Forex 5,574 5,519 6,006 6,926 7,592 Current Assets 22,182 25,685 29,112 32,838 36,411
Excep. & Forex Inc./Loss(-) 214 930 0 0 0 Inventories 2,270 2,341 2,547 2,854 3,142
PBT 5,788 6,449 6,006 6,926 7,592 Sundry Debtors 8,494 10,130 11,210 13,231 14,554
Taxes 1,970 1,461 1,516 1,743 1,911 Cash & Bank Balances 1,733 1,998 2,902 2,724 3,287
Extraordinary Inc./Loss(-) 0 0 0 0 0 Loans & Advances 132 34 34 34 34
Assoc. Profit/Min. Int.(-) 0 0 0 0 0 Other Current Assets 9,552 11,182 12,419 13,995 15,394
Reported Net Profit 3,818 4,988 4,490 5,183 5,681 Current Liab. & Prov. 10,875 9,651 11,228 13,407 14,756
Adjusted Net Profit 3,604 4,058 4,490 5,183 5,681 Current Liabilities 2,945 3,760 4,138 5,097 5,611
Net Margin 11.0% 10.9% 11.2% 11.2% 11.1% Provisions & Others 7,929 5,891 7,090 8,310 9,146
Diluted Share Cap. (mn) 281.2 281.2 281.2 281.2 281.2 Net Current Assets 11,307 16,034 17,884 19,431 21,655
Diluted EPS (INR) 12.8 14.4 16.0 18.4 20.2 Total – Assets 21,237 26,116 30,468 35,496 40,836
Diluted EPS Growth 31.1% 12.6% 10.6% 15.4% 9.6% Source: Company, JM Financial
Total Dividend + Tax 70 122 135 155 341
Dividend Per Share (INR) 0.3 0.4 0.5 0.6 1.2
Source: Company, JM Financial

Cash Flow Statement (INR mn)

Dupont Analysis
Y/E March FY22A FY23A FY24E FY25E FY26E
Y/E March FY22A FY23A FY24E FY25E FY26E
Profit before Tax 5,788 6,449 6,006 6,926 7,592
Net Margin 11.0% 10.9% 11.2% 11.2% 11.1%
Depn. & Amort. 1,346 1,474 1,261 1,472 1,590
Asset Turnover (x) 1.6 1.5 1.3 1.3 1.3
Net Interest Exp. / Inc. (-) 274 298 250 293 323
Leverage Factor (x) 1.0 1.0 1.0 1.0 1.0
Inc (-) / Dec in WCap. -2,595 -4,390 -946 -1,725 -1,661
Others -12 29 0 0 0 RoE 17.5% 16.3% 15.2% 15.1% 14.4%

Taxes Paid -1,661 -1,480 -1,516 -1,743 -1,911

Operating Cash Flow 3,140 2,380 5,055 5,222 5,933 Key Ratios
Capex -2,374 -1,209 -1,200 -1,400 -1,800 Y/E March FY22A FY23A FY24E FY25E FY26E
Free Cash Flow 767 1,171 3,855 3,822 4,133 BV/Share (INR) 79.7 97.2 112.7 130.6 149.6
Inc (-) / Dec in Investments 71 -416 -2,564 -3,552 -2,906 ROIC 17.1% 16.2% 15.3% 15.4% 14.7%
Others 74 -2 0 0 0 ROE 17.5% 16.3% 15.2% 15.1% 14.4%
Investing Cash Flow -2,229 -1,627 -3,764 -4,952 -4,706 Net Debt/Equity (x) -0.1 -0.1 -0.1 -0.1 -0.1
Inc / Dec (-) in Capital 0 0 0 0 0 P/E (x) 21.3 17.4 17.6 15.3 13.9
Dividend + Tax thereon -70 -192 -135 -155 -341 P/B (x) 3.4 2.6 2.5 2.2 1.9
Inc / Dec (-) in Loans -7 3 -3 0 0 EV/EBITDA (x) 11.0 9.8 10.5 9.1 8.3
Others -274 -298 -250 -293 -323 EV/Sales (x) 2.3 1.8 1.9 1.6 1.5
Financing Cash Flow -352 -488 -387 -448 -664 Debtor days 95 99 102 104 104
Inc / Dec (-) in Cash 560 265 903 -178 563 Inventory days 25 23 23 22 22
Opening Cash Balance 1,173 1,733 1,998 2,901 2,723 Creditor days 41 45 46 49 49
Closing Cash Balance 1,733 1,998 2,901 2,723 3,287 Source: Company, JM Financial
Source: Company, JM Financial

JM Financial Institutional Securities Limited Page 5

KNR Constructions 18 November 2023

History of Recommendation and Target Price Recommendation History

Date Recommendation Target Price % Chg.

20-Jul-23 Buy 300

17-Aug-23 Buy 300 0.0

JM Financial Institutional Securities Limited Page 6

KNR Constructions 18 November 2023

APPENDIX I

JM Financial Inst itut ional Secur ities Lim ited

Corporate Identity Number: U67100MH2017PLC296081
Member of BSE Ltd. and National Stock Exchange of India Ltd.
SEBI Registration Nos.: Stock Broker - INZ000163434, Research Analyst - INH000000610
Registered Office: 7th Floor, Cnergy, Appasaheb Marathe Marg, Prabhadevi, Mumbai 400 025, India.
Board: +91 22 6630 3030 | Fax: +91 22 6630 3488 | Email: jmfinancial.research@jmfl.com | www.jmfl.com
Compliance Officer: Mr. Sahil Salastekar | Tel: +91 22 6224 1073 | Email: sahil.salastekar@jmfl.com
Grievance officer: Mr. Sahil Salastekar | Tel: +91 22 6224 1073 | Email: instcompliance@jmfl.com

Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Definition of ratings
Rating Meaning
Buy Total expected returns of more than 10% for stocks with market capitalisation in excess of INR 200 billion and REITs* and more than
15% for all other stocks, over the next twelve months. Total expected return includes dividend yields.
Hold Price expected to move in the range of 10% downside to 10% upside from the current market price for stocks with market
capitalisation in excess of INR 200 billion and REITs* and in the range of 10% downside to 15% upside from the current market price
for all other stocks, over the next twelve months.
Sell Price expected to move downwards by more than 10% from the current market price over the next twelve months.
* REITs refers to Real Estate Investment Trusts.
Research Analyst(s) Certification
The Research Analyst(s), with respect to each issuer and its securities covered by them in this research report, certify that:
All of the views expressed in this research report accurately reflect his or her or their personal views about all of the issuers and their securities; and
No part of his or her or their compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in this research
report.
Important Disclosures
This research report has been prepared by JM Financial Institutional Securities Limited (JM Financial Institutional Securities) to provide information about the
company(ies) and sector(s), if any, covered in the report and may be distributed by it and/or its associates solely for the purpose of information of the select
recipient of this report. This report and/or any part thereof, may not be duplicated in any form and/or reproduced or redistributed without the prior written
consent of JM Financial Institutional Securities. This report has been prepared independent of the companies covered herein.
JM Financial Institutional Securities is registered with the Securities and Exchange Board of India (SEBI) as a Research Analyst and a Stock Broker having trading
memberships of the BSE Ltd. (BSE) and National Stock Exchange of India Ltd. (NSE). No material disciplinary action has been taken by SEBI against JM Financial
Institutional Securities in the past two financial years which may impact the investment decision making of the investor. Registration granted by SEBI and
certification from the National Institute of Securities Market (NISM) in no way guarantee performance of JM Financial Institutional Securities or provide any
assurance of returns to investors.
JM Financial Institutional Securities renders stock broking services primarily to institutional investors and provides the research services to its institutional
clients/investors. JM Financial Institutional Securities and its associates are part of a multi-service, integrated investment banking, investment management,
brokerage and financing group. JM Financial Institutional Securities and/or its associates might have provided or may provide services in respect of managing
offerings of securities, corporate finance, investment banking, mergers & acquisitions, broking, financing or any other advisory services to the company(ies)
covered herein. JM Financial Institutional Securities and/or its associates might have received during the past twelve months or may receive compensation from
the company(ies) mentioned in this report for rendering any of the above services.
JM Financial Institutional Securities and/or its associates, their directors and employees may; (a) from time to time, have a long or short position in, and buy or sell
the securities of the company(ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) covered under this report or (c) act as an advisor or lender/borrower to,
or may have any financial interest in, such company(ies) or (d) considering the nature of business/activities that JM Financial Institutional Securities is engaged in,
it may have potential conflict of interest at the time of publication of this report on the subject company(ies).
Neither JM Financial Institutional Securities nor its associates or the Research Analyst(s) named in this report or his/her relatives individually own one per cent or
more securities of the company(ies) covered under this report, at the relevant date as specified in the SEBI (Research Analysts) Regulations, 2014.
The Research Analyst(s) principally responsible for the preparation of this research report and their immediate relatives are prohibited from buying or selling debt
or equity securities, including but not limited to any option, right, warrant, future, long or short position issued by company(ies) covered under this report. The
Research Analyst(s) principally responsible for the preparation of this research report or their immediate relatives (as defined under SEBI (Research Analysts)
Regulations, 2014); (a) do not have any financial interest in the company(ies) covered under this report or (b) did not receive any compensation from the
company(ies) covered under this report, or from any third party, in connection with this report or (c) do not have any other material conflict of interest at the time
of publication of this report. Research Analyst(s) are not serving as an officer, director or employee of the company(ies) covered under this report.

JM Financial Institutional Securities Limited Page 7

KNR Constructions 18 November 2023

While reasonable care has been taken in the preparation of this report, it does not purport to be a complete description of the securities, markets or
developments referred to herein, and JM Financial Institutional Securities does not warrant its accuracy or completeness. JM Financial Institutional Securities may
not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. This
report is provided for information only and is not an investment advice and must not alone be taken as the basis for an investment decision.
This research report is based on the fundamental research/analysis conducted by the Research Analyst(s) named herein. Accordingly, this report has been
prepared by studying/focusing on the fundamentals of the company(ies) covered in this report and other macro‐economic factors. JM Financial Institutional
Securities may have also issued or may issue, research reports and/or recommendations based on the technical/quantitative analysis of the company(ies) covered
in this report by studying and using charts of the stock's price movement, trading volume and/or other volatility parameters. As a result, the
views/recommendations expressed in such technical research reports could be inconsistent or even contrary to the views contained in this report.
The investment discussed or views expressed or recommendations/opinions given herein may not be suitable for all investors. The user assumes the entire risk of
any use made of this information. The information contained herein may be changed without notice and JM Financial Institutional Securities reserves the right to
make modifications and alterations to this statement as they may deem fit from time to time.
This report is neither an offer nor solicitation of an offer to buy and/or sell any securities mentioned herein and/or not an official confirmation of any transaction.
This report is not directed or intended for distribution to, or use by any person or entity who is a citizen or resident of or located in any locality, state, country or
other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject JM Financial Institutional
Securities and/or its affiliated company(ies) to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be
eligible for sale in all jurisdictions or to a certain category of investors. Persons in whose possession this report may come, are required to inform themselves of
and to observe such restrictions.
Additional disclosure only for U.S. persons: JM Financial Institutional Securities has entered into an agreement with JM Financial Securities, Inc. ("JM Financial
Securities"), a U.S. registered broker-dealer and member of the Financial Industry Regulatory Authority ("FINRA") in order to conduct certain business in the
United States in reliance on the exemption from U.S. broker-dealer registration provided by Rule 15a-6, promulgated under the U.S. Securities Exchange Act of
1934 (the "Exchange Act"), as amended, and as interpreted by the staff of the U.S. Securities and Exchange Commission ("SEC") (together "Rule 15a-6").
This research report is distributed in the United States by JM Financial Securities in compliance with Rule 15a-6, and as a "third party research report" for
purposes of FINRA Rule 2241. In compliance with Rule 15a-6(a)(3) this research report is distributed only to "major U.S. institutional investors" as defined in Rule
15a-6 and is not intended for use by any person or entity that is not a major U.S. institutional investor. If you have received a copy of this research report and are
not a major U.S. institutional investor, you are instructed not to read, rely on, or reproduce the contents hereof, and to destroy this research or return it to JM
Financial Institutional Securities or to JM Financial Securities.
This research report is a product of JM Financial Institutional Securities, which is the employer of the research analyst(s) solely responsible for its content. The
research analyst(s) preparing this research report is/are resident outside the United States and are not associated persons or employees of any U.S. registered
broker-dealer. Therefore, the analyst(s) are not subject to supervision by a U.S. broker-dealer, or otherwise required to satisfy the regulatory licensing
requirements of FINRA and may not be subject to the Rule 2241 restrictions on communications with a subject company, public appearances and trading
securities held by a research analyst account.
Any U.S. person who is recipient of this report that wishes further information regarding, or to effect any transaction in, any of the securities discussed in this
report, must contact, and deal directly through a U.S. registered representative affiliated with a broker-dealer registered with the SEC and a member of FINRA. In
the U.S., JM Financial Institutional Securities has an affiliate, JM Financial Securities, Inc. located at 1325 Avenue of the Americas, 28th Floor, Office No. 2821,
New York, New York 10019. Telephone +1 (332) 900 4958 which is registered with the SEC and is a member of FINRA and SIPC.
Additional disclosure only for U.K. persons: Neither JM Financial Institutional Securities nor any of its affiliates is authorised in the United Kingdom (U.K.) by the
Financial Conduct Authority. As a result, this report is for distribution only to persons who (i) have professional experience in matters relating to investments
falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the "Financial Promotion Order"), (ii)
are persons falling within Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations etc.") of the Financial Promotion Order, (iii) are outside
the United Kingdom, or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial
Services and Markets Act 2000) in connection with the matters to which this report relates may otherwise lawfully be communicated or caused to be
communicated (all such persons together being referred to as "relevant persons"). This report is directed only at relevant persons and must not be acted on or
relied on by persons who are not relevant persons. Any investment or investment activity to which this report relates is available only to relevant persons and will
be engaged in only with relevant persons.
Additional disclosure only for Canadian persons: This report is not, and under no circumstances is to be construed as, an advertisement or a public offering of the
securities described herein in Canada or any province or territory thereof. Under no circumstances is this report to be construed as an offer to sell securities or as
a solicitation of an offer to buy securities in any jurisdiction of Canada. Any offer or sale of the securities described herein in Canada will be made only under an
exemption from the requirements to file a prospectus with the relevant Canadian securities regulators and only by a dealer properly registered under applicable
securities laws or, alternatively, pursuant to an exemption from the registration requirement in the relevant province or territory of Canada in which such offer or
sale is made. This report is not, and under no circumstances is it to be construed as, a prospectus or an offering memorandum. No securities commission or
similar regulatory authority in Canada has reviewed or in any way passed upon these materials, the information contained herein or the merits of the securities
described herein and any representation to the contrary is an offence. If you are located in Canada, this report has been made available to you based on your
representation that you are an “accredited investor” as such term is defined in National Instrument 45-106 Prospectus Exemptions and a “permitted client” as
such term is defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Under no circumstances is the
information contained herein to be construed as investment advice in any province or territory of Canada nor should it be construed as being tailored to the
needs of the recipient. Canadian recipients are advised that JM Financial Securities, Inc., JM Financial Institutional Securities Limited, their affiliates and authorized
agents are not responsible for, nor do they accept, any liability whatsoever for any direct or consequential loss arising from any use of this research report or the
information contained herein.

JM Financial Institutional Securities Limited Page 8