MUMBAI: CRISIL has assigned a CRISIL IPO Grade '3/5' to the proposed initial public offer of KNR Constructions Ltd. This grade indicates that the fundamentals of the issue are average, in relation to other listed equity securities in India.
The company is planning a public issue of 7,874,570 equity shares of face value Rs 10 targeting an issue size in the range of Rs 150-Rs 175 crore.
The grading reflects KNR Constructions' strong track record of project execution in both roads construction and operations and maintenance. The company has executed many projects as part of the NHAI's NHDP program and has had a 7-year relationship with Patel Engineering as a joint venture partner.
The KNR-Patel JV has won 10 road construction projects so far. These include two BOT annuity projects as a part of NHDP Phase II, the combined value of which is Rs 9.6 billion. As of September 2007, KNR's order book stood at Rs 16.25 billion, of which the roads sector constituted 89 per cent.
The grading is constrained by the relatively underdeveloped state of the company's operating system, which in turn, could constrain its ability to augment the size of its operations. The grading also reflects the uncertainties associated with company's plans to diversify into the power generation and real estate sectors.
KNR is engaged in the business of providing engineering, procurement and construction services in the transportation sector, namely, roads and highways, irrigation and urban water infrastructure management. Roads and highways is the key business of operation, forming 89 per cent of the company's order book as on September 30, 2007. The company has been awarded various projects by both NHAI and state governments.
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