KNR Constructions has agreed to sell four hybrid annuity road assets to Indus Infra Trust, its listed infrastructure investment trust (InvIT), in a transaction valued at ₹35 billion at the enterprise level. The deal implies an equity valuation of ₹15.4 billion, or nearly 2.8 times the equity invested, providing a significant boost to the company’s cash position.
The assets being divested were developed at a total project cost of ₹58 billion, funded through a mix of equity worth ₹5.7 billion, debt of ₹22 billion and government grants of ₹29.6 billion. The sale includes surplus cash of ₹1.4 billion and values the equity at around 2.5 times investment—well above earlier expectations and past transactions in the sector.
Analysts say the strong valuation reflects timely execution and cost efficiency, with projects completed below bid project costs, as well as heightened demand for annuity assets from InvITs and other yield-focused investors. Comparable road assets were previously sold at lower multiples, underscoring the premium achieved in this deal.
The asset sale is expected to free up capital for KNR at a time when order inflows have been subdued. The company has not secured major highway projects over the past two years amid weak tendering activity, resulting in a relatively modest executable order book of ₹48 billion. Excluding mining projects scheduled to commence from FY27, this translates into a book-to-bill ratio of about 1.5 times.
Proceeds from the transaction will partly fund equity commitments of ₹2.1 billion across three ongoing hybrid annuity projects, covering nearly half of the pending requirement. Improved liquidity and net worth are also expected to strengthen KNR’s balance sheet and support future bidding activity.
Following a sharp correction in the stock over the past year, KNR Constructions is now trading at around eight times FY27 estimated EPC earnings. Reflecting the improved financial outlook but limited near-term growth visibility, the stock has been upgraded to ‘Hold’ with a revised target price of ₹170.
