Stock Recommendations For Your Portfolio

KNR CONSTRUCTIONS| BSE CODE: 532942| VOLUME: 359439| CMP: Rs.284

KNR Constructions (KNR) has enjoyed good average EBITDA margins of 14-15 per cent and PAT margins of 7-7.5 per cent in the past fi ve years. In addition, the company has maintained a strong balance-sheet with low net debt-to-equity of 0.1- 0.2x and average core ROCE of 20 per cent plus in the past 5-7 years. Although the balancesheets of most road contractors and developers are stressed, KNRC is one of the notable exceptions in the sector. As a result, we believe that KNRC is well-placed to benefit from expected order uptick in EPC road tenders from the NHAI and Indian state governments in forthcoming quarters. KNR currently has an order book of around Rs. 1,200 crore as of Q1 FY15 (1.5xFY14 revenues; 90 per cent in roads segment). Currently KNR is trading at a TTM PE ratio of 11.04 and on the basis of price to book, it trades at 1.22x.

CENTURY TEXTILES| BSE CODE: 500040| VOLUME: 123282| CMP: Rs.543

Century Textiles (CENT), BK Birla Group’s flagship, is a diversified company with presence in cement, textiles, paper and pulp, and chemicals. It has 10 MTPA of cement capacity (to be expanded to 12.8 MTPA by Q3 FY15) and has the largest market share in central India. CENT issued 18.65 million warrants to IGH Holdings Private Limited owned by KM Birla, which on conversion into as many shares will raise the promoter group’s holding from 40.23 per cent to 60.28 per cent. In Q1 FY15, the net profi t of CENT zoomed 77 per cent to Rs. 66.49 crore on the back of 19 per cent jump in net sales revenue to Rs. 1,887.37 crore. Th e jump in topline seems largely due to rise in revenue from its cement division (contributes 53 per cent of sales) by 21 per cent to Rs. 1,009 crore, pulp and paper division (contributes 23 per cent of sales) by 17 per cent to Rs. 445 crore and textile segment (contributes 22 per cent of sales) by 9 per cent to Rs. 430 crore.