Larsen & Toubro and Welspun Corp are key Indian stocks to watch as Saudi Arabia rebuilds its oil and gas infrastructure. L&T already secured many large orders from Saudi Aramco. Meanwhile, Welspun expects gains from water projects. Management said, "The Saudi government has been investing heavily in the water infrastructure."
Here are three stocks to watch as Saudi Arabia rebuilds its oil and gas infrastructure.
Larsen & Toubro is one of India's largest engineering, procurement and construction (EPC), manufacturing and technology groups. Its businesses span infrastructure, energy, defence, heavy engineering, technology services, and financial services.
L&T has a solid presence in Saudi Arabia, so the company could benefit from future orders as rebuilding work continues.
Previously, L&T has successfully completed the commissioning of the Jafurah Gas Compression Project Phase-1 for Saudi Aramco. Apart from this, it has also completed and commissioned the Jafurah Export Pipeline Project for Saudi Aramco.
A large order was secured from Saudi Aramco under the unconventional resources maintain potential program for packages 28 and 29.
The company has also secured ultra-mega offshore contract from Saudi Aramco for Zuluf Redevelopment PKG 1 & PKG 2 (CRPO 145-146) for the replacement of 15 old platforms, 2 new tie-in platform topsides, associated pipelines and modifications.
L&T also procured two significant orders from Saudi Aramco (CRPO 158, 160) for 10 jackets and 2 Production Deck Modules (PDMs).
Given the company's long history in Saudi Arabia, it could benefit from rebuilding work.
The company reported revenues of ₹67,941 crore in Q1FY27 versus ₹63,678 crore a year ago. Net profit stood at ₹4,982 crore versus ₹4,325 crore YoY.
#2 Welspun Corp
Welspun Corp acquired a controlling stake in a Saudi HSAW pipe mill in Dammam in 2011. Welspun identifies Saudi Arabia as one of its three manufacturing countries, alongside India and the US.
The company’s gains could come not only from Saudi Arabia rebuilding and expanding its oil and gas sector, but also from water projects.
The management said on a recent earnings call that, while oil and gas are critical, the water sector is equally important.
The Saudi government has been investing heavily in the water infrastructure sector for many years, and that continues unabated. A lot of massive desalination projects are coming on stream.
According to the management, Saudi Arabia will also need multiple large-diameter pipelines to transport this desalinated water to cities.
On top of that, the country also needs to transport massive amounts of water to cities, which would require a large pipeline network.
Therefore, rebuilding oil and gas pipelines and expanding desalination plants should boost pipe demand in Saudi Arabia. How much of this will Welspun cash in on is hard to say.
The company reported revenues of ₹4081 crore against ₹3551 crore a year ago. Welspun Corp's net profit was ₹427 crore against ₹300 crore.
#3 MAN Industries
This company, which is in the pipes business, has a strong presence in Saudi Arabia following a recent acquisition.
In May, MAN Industries, through its wholly owned subsidiary MAN International Steel Industries Company (MISIC), acquired 100% of National Pipe Company Ltd (NPC), Saudi Arabia, for a total cash outflow of US$ 102 m.
NPC carries a strong balance sheet with cash and liquid assets of $83 million comprising cash and bank balances of $38 million.
NPC is a profit-making, debt-free, API-certified large-diameter SAW pipe manufacturer with an established order book comprising active orders from Saudi Aramco and other marquee clients, with full regulatory approvals in place, and 100% of its assets acquired making this a fully operational, revenue-generating asset from day 1.
The company holds API 5L and API 2B certifications, is ISO 9001:2015 certified, and has been a Saudi Aramco Approved Vendor for over two decades. The acquisition of NPC provides immediate large-diameter pipe manufacturing capacity in the kingdom.
NPC’s key clients include Saudi Aramco, Saudi Water Authority (SWA), Saudi Water Partnership Company (SWPC), Water Transmission & Technologies Co. (WTTCO), KOC (Kuwait), Qatar Petroleum, and leading global EPC contractors like McDermott, L&T, SAIPEM, Subsea7, Hyundai E&C, and others.
This puts MAN Industries in a strong position as Saudi Arabia expands and rebuilds its pipelines.
The company reported revenues of ₹1,053 crore in Q1FY27 against ₹742 crore a year ago. MAN Industries reported a net profit of ₹61 crore versus ₹27 crore.
This article is syndicated from Equitymaster.com
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