Karvy Stock Broking recommended Buy on KNR Constructions (KNRC) with target price of Rs 325 against current market price of Rs 243.

Commenting on the investment rationale, the stock broker said,"KNRC continues to rely on past learning’s of being patient focus remains on execution, taking higher margins projects & avoid excessive investment largesse on diversification. Although part of re-rating is already in price, going into the cyclical recovery later next year, we expect re-rating tailwinds to further continue on back of superior execution, low debt/equity and minimal incremental project equity requirement."

"KNRC has Rs 13 billion of order backlog which is 1.4x FY15E revenues and hence future growth is contingent on new order intake. We expect Road ordering activity to pick up from 2HFY15E and owing to strong execution capability KNRC stands to benefit from own/third party wins as EPC contract may get outsourced to it. We have modeled for 56% EPS CAGR for FY15-17E" it said.

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