KEC eyes doubling civil biz to ~2,000 cr in FY22
With strong visibility for metro projects and government spending, KEC International is looking to double civil business segment to ~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 centres, which assure us of doubling the top line this financial year,” Vimal Kejriwal, managing director (MD) and chief executive officer (CEO) of KEC International said.
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 said it has a robust order book and lowest bidding of ~4,500 crore for the civil business segment. In FY21, the company’s civil business had already grown three times to ~1,080 crore, up 187 per cent from ~376 crore in the year-ago period. With strong revenue visibility in the civil segment, it has also been investing ~70-80 crore since last year as capex. “Around the same amount of capex will be deployed this year as well as next year.
Another positive is that the equipment needed for this business are even available for rental or at a 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.
Though revenue growth for KEC International’s civil business looks strong, going ahead, it is likely to take some time for margins to pick up in its T&D and railways businesses. “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 a ~3,000-crore top line, which is another 50 per cent over FY22 and which is expected in FY23, we should be able to touch a double-digit margin (in civil),” said Kejriwal.