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Small and steady wins the race: how KNR Constructions became the only infra company to beat Nifty50

Amid a bloodbath in mid- and small-cap construction stocks, KNR has relatively stood firm. With investors increasingly trimming exposure to debt-heavy infrastructure businesses, KNR has a clear advantage on that front. However, the most important question is: can an infrastructure company be wary of debt and still be successful in business for long?
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priyanka
13 Mar 2020 6 Mins Read 0 comment
K Jalandhar Reddy (centre), executive director, KNR Constructions, during the annual meet of KNR Limited; credit:@knrcled via Facebook
K Jalandhar Reddy (centre), executive director, KNR Constructions, during the annual meet of KNR Limited; credit:@knrcled via Facebook
In mid-2017, before India’s roads sector started showing signs of recovery after years of stagnation, the management of KNR Constructions had a tough decision to make. Led by father-son duo, Narasimha and Jalandhar Reddy, KNR’s management realised that the company’s toll project in Kerala was not making enough cash to meet its debt obligations. The project, which was
in the middle of distress and we are heading into a financial recession. Most of state governments are absent from the business. If we come out of financial recession, the company can grow 15%-20% every year,” says Reddy. But beyond March-end, he adds, “I would like to be reserved about expectations.” ( Graphics by Sadhana Saxena)
In mid-2017, before India’s roads sector started showing signs of recovery after years of stagnation, the management of KNR Constructions had a tough decision to make. Led by father-son duo, Narasimha and Jalandhar Reddy, KNR’s management realised that the company’s toll project in Kerala was not making enough cash to meet its debt obligations. The project, which was in the middle of distress and we are heading into a financial recession. Most of state governments are absent from the business. If we come out of financial recession, the company can grow 15%-20% every year,” says Reddy. But beyond March-end, he adds, “I would like to be reserved about expectations.” ( Graphics by Sadhana Saxena)

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