Enhanced spending by countries for building oil and gas pipelines in the backdrop of the Russia-Ukraine war is seen fuelling growth for KEC International Limited.

The company expects revenues from the recently-acquired KEC Spur Infrastructure Private Limited (formerly known as Spur Infrastructure Private Limited) to grow more than three times within a year, thanks to oil & gas pipeline orders from within India and Middle-East (M-E).

M-E's increased spending

Speaking to Businessline, Vimal Kejriwal, MD & CEO, KEC International Ltd informed that the war had caused uncertainty about the future of oil and gas security for the countries. "Suddenly, securing oil and gas is becoming a big issue. Within India, we see a lot of tenders coming up for gas pipelines. Globally, Middle East is spending money on projects like they used to spend in the old days. They are spending big on Transmission and Distribution (T&D) and oil & gas pipelines," said Kejriwal, adding that the acquisition of Ahmedabad-based Spur Infra was aimed at creating capabilities in oil & gas and grow within India and outside.

KEC Spur Infra's revenues jumped from about ₹110 crore in fiscal 2021 (before acquisition) to about ₹250 crore in 2021-22. "This year, our target would be to reach ₹750 crore in the oil and gas pipeline. Effectively, we see this segment to grow four times," said Kejriwal adding that the company will look for orders from international markets such as Africa, Bangladesh and Middle-East besides within India.

Strong orderbook

At a consolidated level, KEC Infrastructure - the RPG Group company has an orderbook of ₹28,000 crore (including ₹4,000 crore of L1 bid orders). "Last year our revenues were close to ₹14,000 crore. We should grow at least 15 per cent this year notwithstanding the headwinds," said Kejriwal indicating that the margin pressures due to commodity prices would ease soon. "The steel, copper, aluminium prices have come down. And hopefully we expect by the end of Q2 or by Q3, we should start showing a significant uptick in margins," he said.

Recently, KEC International had secured new orders worth ₹1,100 crore across businesses, including T&D, Railways, Civil and Cables. "A large part of this is coming from India T&D business, which has been languishing for the last few years. There are tenders coming up in big numbers for power projects that were stalled and renewable projects," he said.

Capex cycle revival

Kejriwal expects civil business revenues from sectors such as cement, mining, metals to touch ₹3,600 crore this year with nearly 100 per cent growth over last year’s ₹1,900 crore. KEC is also building residential properties in Mumbai, Pune and Bengaluru as part of civil business.

The Government's spending on key projects such as road, power and railways is also seen fuelling capex cycle. "The government is spending money on targeted projects getting returns, which is a good thing," he said.

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