KNR Constructions: Why JM Financials cuts price target amid Rs 1,450 cr Telangana debt & broken margins

KNR Constructions faces a price target cut by JM Financial after weak Q4 FY26 results and margin pressure—review the outlook now.

Written by Sparsh Bansal

June 4, 2026 13:56 IST

A stalled highway infrastructure construction site with idle heavy machinery, asphalt pavers, and concrete barriers under an overcast sky.

KNR Constructions faced a target price downgrade to Rs 135 from JM Financial. (Image: Canva)

JM Financial reduced its 12-month price target for KNR Constructions to Rs 135 from Rs 145, looking at a downside of 7%. This cut target price came after it reported a huge fall in its quarterly performance for the fourth quarter of FY26, and a weak margin outlook and executable backlog. The brokerage house retained its ‘Reduce’ rating on the stock.

Weak earnings performance

KNR Constructions’ Q4FY26 earnings were significantly lower than expected, with adjusted net profit slumping to Rs 16.1 crore. This was driven by a sharp 40% decline in revenue and a substantial contraction in EBITDA margins.

Lowered margin guidance

The company’s management has lowered its EBITDA margin guidance to 10–11%, a significant drop from previous levels of around 13–14%. This reduction is attributed to a changing project mix and a declining share of the higher-margin irrigation vertical in the company’s backlog.

Weak executable backlog and delays

While the total backlog improved to Rs 8,700 crore, JM Financial noted that “executability remains weak”. A major Rs 3,600 crore mining project has faced further delays of 7–8 months, with execution now not expected to begin until Q4FY27.

Elevated receivables

Irrigation receivables from the Telangana government remain high at Rs 1,450 crore. These delayed payments continue to negatively impact execution and cause medium-term growth uncertainties.

Valuation multiples de-rating

Due to the company’s “under-delivery on execution/margins,” JM Financial lowered its target PE multiple from 13x to 11x. Consequently, they cut EPS estimates for FY27 and FY28 by 8% and 15%, respectively.

“While KNR derives intrinsic strengths from a proven track record, good governance and strong balance sheet, we see uncertainties in its medium-term growth outlook caused by uncertain prospects for its irrigation segment and weak executable backlog,” said JM Financial.

KNR Constructions’ share price performance

The share price of KNR Constructions has fallen 0.5% in the last five trading sessions. The stock has risen 4% in the past one month and has dropped 12.5% in the last six months. KNR Constructions’ stock price has erased more than 37% over the previous 12 months.

KNR Constructions Q4FY26

For the quarter ended March 31, 2026, the consolidated net profit was Rs 106 crore, with revenue at Rs 696 crore.

In FY26, the company reported a drop of 56% in consolidated net profit to Rs 437 crore, compared to Rs 1,002 crore in the previous year. Its revenue from operations fell to Rs 2,698 crore from Rs 4,753 crore in FY25.

Also, the Board of Directors proposed a final dividend of Rs 0.25 per equity share of face value Rs 2 each.

This article was first uploaded on June four, twenty twenty-six, at fifty-six minutes past one in the afternoon.