This Water Management stock, which deals in the business of designing, supplying, installing, constructing, and managing operations related to drinking water, industrial water treatment, wastewater treatment, and desalination plants, surged upto 3 percent in early trade after the company receives ~Rs. 360 crore for DBO & O&M from GAIL & IOCL
Share Price Movement
In Thursday’s trading session, Va Tech Wabag‘s share price was up by 2.41 percent and touched a day’s high of Rs. 1,355.35. The stock reiterated from the day’s high and was trading at Rs. 1,333.50 which is 0.77 percent higher than the previous close of Rs. 1,323.35 per share. In the past year, the stock has given around 102 percent returns and outperformed the Nifty Index.
What happened
The company’s stock is in focus after Va Tech Wabag received an order worth ~Rs. 340 crore towards Design, Build, Operate (DBO) of a 450 cum/hr UF & RO based Effluent Recycle Plant, Evaporator based Zero Liquid Discharge (ZLD) Plant and new Waste Water Treatment Plant & augmentation of existing Waste Water Treatment Plant, for the PSU company like GAIL (India) Limited.
The Engineering, Procurement, Construction (EPC) is scheduled to be completed over a 24-month period and to be followed by 6 months of Operation and Maintenance (O&M).
GAIL appointed the Projects and Development India Limited (PDIL) as the Engineer-In-Charge for this Project. The recovered water from this facility will be used as the Cooling Tower Make Up water.
Further, Va Tech also received a repeat Operations & Maintenance (O&M) order from Indian Oil Corporation Limited (IOCL) worth ~Rs. 20 Crores towards O&M of the Tertiary Treatment Reverse Osmosis (TTRO) Plant at IOCL Panipat Refinery, for a 3-year period.
Management Commentary
Commenting on the order, the Head – Sales & Marketing for India Cluster, Va Tech Wabag, S Natrajan said “We are delighted to have secured these significant industrial water treatment orders and we sincerely thank GAIL and IOCL for their trust and confidence placed in us. These repeat orders serve as a powerful testament to the strength of our long-standing customer relationships, as well as to our technical expertise and capabilities. They further solidify our leadership position in the Oil and Gas sector, marking yet another important milestone in our journey.”
Future Plans
The Management targets to triple its order book relative to its revenue in the medium term. They aim for 15 to 20 percent CAGR in revenue, an EBITDA margin of 13 to 15 percent, RoCE above 20 percent, and RoE exceeding 15 percent. They plan for Operations & Maintenance (O&M) to contribute around 20 percent of total revenue and expect 15 to 20 percent revenue growth by FY26.
A strong order book ensures revenue visibility over the period, while the Indian companies might benefit from initiatives like Namami Gange 2.0 which is under the Jal Shakti Ministry. The company remains committed to an asset-light model, net cash positivity, and strong investor returns. They acknowledge the risks involved in project execution and potential margin fluctuations but remain confident in their strategy.
Financials
In its latest filing for the quarter ending December 2024, the company reported a 15.19 percent rise in revenue, reaching Rs.811 crore compared to Rs.704 crore in Q3FY24. During the same period, net profit increased by 11.11 percent to Rs.70 crore in Q3FY25, compared to Rs.63 crore in Q3FY24. The EBITDA margins saw a 100 bps fall to 13 percent and Net profit saw a 20 bps fall to 8.7 percent in Q3FY25
Order Book & its guidance
The total order book as of December 2024 is around Rs. ~14,263.4 crore with 58 percent of EPC projects and the remaining 42 percent from O&M projects. 84 percent of the projects are from Municipals and 16 percent from Industrial.
They procured 60 percent of orders from India and the remaining 40 percent from the Rest of the World. Va Tech expects to gain orders worth around Rs. 1,000 crore in Q4FY25.
Company Profile
VA Tech Wabag is a water management company specializing in water treatment and desalination solutions. The company was founded in 1995 and offers comprehensive services for municipal and industrial clients globally.
Written by – Santhosh S
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