The shares of this smallcap company surged around 8 percent in Friday’s trading session after receiving an order worth Rs. 2,700 crores from Saudi Water Authority. On a YTD basis, the stock has delivered more than a 100 percent return to its shareholders.
Price Movement:
With a market capitalization of Rs. 8,421 crores, the shares of Va Tech Wabag Ltd started Friday’s trading session on a higher note at Rs. 1,386 compared to its previous close of Rs. 1,287.95.
During the trading session, the shares hit a high of Rs. 1,394, gaining around 8 percent and are currently trading at Rs. 1,353 apiece.
What Happened:
Such a bullish movement in the share price was observed after the company in an exchange filing announced that it had secured a major contract from the Saudi Water Authority (SWA) worth USD 317 Million (Rs. 2,700 crores) from Saudi Water Authority towards a 300 MLD Mega Sea Water Desalination Plant in the Kingdom of Saudi Arabia.
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The company secured the project for Engineering Procurement, Construction and Commissioning (EPCC) of a 300 Million Litre per Day (MLD) Mega Sea Water Reverse Osmosis (SWRO) Desalination Plant in Yanbu, Kingdom of Saudi Arabia (KSA). The project is scheduled to be completed within 30 months.
The plant will be built with state-of-the-art desalination technologies, designed for superior energy efficiency. It will produce stellar quality water complying with the environmental regulations of the KSA.
Financials:
Looking at the company’s financial statement, the revenue decreased by around 33 percent from Rs. 934 crores during the March quarter to Rs. 626 crores in the June quarter. On the other hand, the net profits declined by 29 percent from Rs. 78 crores to Rs. 55 crores during the same timeframe.
Order Book:
In the first quarter of FY25, Va Tech Wabag Ltd reported a significant order book composition of Rs. 1,14,484 million (Rs. 11,448 crores), with a mix of 55 percent EPC and 45 percent O&M.
Moreover, The company has achieved preferred bidder status for several international projects worth over Rs. 6,000 crores, signalling strong potential for future growth.
Future Outlook:
VA Tech Wabag Limited aims to double its revenues within the next 4-5 years while improving margins to 13–15 percent EBITDA. Furthermore, the company is targeting an order book to reach between Rs.16,000-17,000 crore by the end of the year.
Additionally, the company plans to integrate new technologies in the semiconductor and green hydrogen sectors, with a goal of executing 100 projects in the biogas sector over the next few years.
Prominent Investors:
According to the BSE data, Mr late Rakesh Jhunjhunwala entered the stock in September 2020. Currently, his portfolio is taken care of by his wife Rekha Rakesh Jhunjhunwala. The Ace investor’s wife holds 50 lakh shares equivalent to 8.04 percent and the current value of the investment is Rs. 676.3 crores.
Company Profile:
Headquartered in Chennai, VA Tech Wabag was incorporated in 1995. The company is engaged in the business of water treatment field. Its principal activities include the design, supply, installation, construction and operational management of drinking water, wastewater treatment, industrial water treatment and desalination plants.
Written By Vaibhav Patil
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