KEC International Ltd gained more than 7% in morning trades on Monday on its plans to acquire an EPC company in the oil and gas pipeline sector. EPC stands for engineering, procurement, and construction. KEC announced entering into a definitive agreement to acquire 100% equity in Spur Infrastructure Pvt. Ltd for an enterprise value of ₹62 crore subject to customary adjustments at closing. The acquisition is expected to be completed within 60 days from the date of the agreement said KEC.
Acquisition of Spur Infra is likely to help KEC diversify into adjacent areas of growth. The experienced manpower, technical expertise and relevant pre-qualification of Spur Infra will enable KEC to capture the lucrative opportunities in Oil & Gas space.
Spur Infra has annual revenue in excess of Rs. 100 crores and a profitable track record, said KEC. The Spur Infra’s order book stands at Rs. 600 crores and comprised of cross-country pipelines and city gas distribution network projects from marquee customers, it added. Marquee customers include GAIL India Ltd, Indian Oil Corporation Ltd, Indraprastha Gas Ltd etc.
The oil and gas cross-country pipelines offer significant opportunities in the EPC space in India as well as in international markets. The rising city gas distribution circles in India is in themselves offering a great opportunity to KEC.
KEC has already been posting healthy revenue growth. The company saw revenue growth of 15% year-on-year during the June quarter. The same was helped by robust growth in Railways (up 14% year-on-year. Even other segments as Civil works and Cables saw phenomenal revenues growth. Though transmission and Distribution or T&D business also saw revenues grow well, however, there was some disappointment in the international T&D business. T&D SAE reported a 27% decline in revenues which also led to an impact on operating performance. The larger-than-anticipated impact of Covid-19 and commodity inflation were key reasons for the impact.
The order book growth nevertheless was healthy. Domestic order inflows grew 2.5 times to Rs3000 crore, while the pace of total order inflows remained healthy at Rs4400 crore during Q1. The company also said there was a pipeline of ₹26000 crore orders where it stands as the lowest bidder.
