KEC International to double civil business revenue to Rs 2,000 cr in FY22

With strong visibility for metro projects and government spending, KEC International is looking to double its civil business segment to Rs 2,000 crore in FY22.

“We have six metro projects with us along with large water pipeline projects and construction orders from airports, oil&gas and data centers sections which assures us of doubling of topline this fiscal,” Vimal Kejriwal, managing director and chief executive officer of KEC International told Business Standard.

Of the top three revenue streams of KEC International, its civil business is the third-largest contributor after transmission and distribution (T&D) and railways.

In the company’s recent earnings conference call, Kejriwal informed that the company has a robust order book and the lowest bidding of Rs 4,500 crore for the civil business segment.

In FY21, the company’s civil business has already grown three times to Rs 1,080 crore, up 187 per cent from Rs 376 crore noted in the same period of the preceding year.

With strong revenue visibility in the civil segment, the company has also been investing Rs 70-80 crore since last year as capex.

“Around same amount of capex will be deployed this year as well as next year. Another positive for this business is that the equipment needed for this business are even available for rental or at cheaper price due to relatively low demand on the back of covid. So the capex amount though earmarked need not see the entire spend,” said Kejriwal.

Capital goods company KEC International has to face stiff competition from large players such as Larsen&Tourbro (L&T), ABB India Ltd and Siemens Ltd among others.

Though the revenue growth for KEC International’s civil business looks strong going ahead, for margins to pick up to the extent of its T&D and Railways business, it is likely to take some time.

“We have built a lot of capability in our civil business. All that can yield a good margin once it has reached a particular size. Once we do Rs 3,000 crore topline, which is another 50 percent over FY22 and which is expected to achieve in FY23, we should be able to touch a double digit margin (in civil) which will be in line with our railways segment,” said Kejriwal.

The company’s T&D business margins are at about 12-13 per cent, while that of its Railways business is at 10 per cent.

In June quarter FY22, the company’s total sales stood at Rs 2,540 crore, of which T&D segment contributed 51 per cent, while the non-T&D contributed 49 per cent.