This water management company engaged in designing, building, operating, and maintaining water treatment and desalination plants for cities and industries, and its stock has jumped 16.71 percent as the market recovered, making investors wonder whether to sell or hold.
Stock Price Movement:
With a market capitalization of Rs. 9,244.61 crores, the share of Va Tech Wabag Limited has reached an intraday high of Rs. 1,579.80 per equity share, rising nearly around 0.85 percent from its previous day’s close price of Rs. 1,566.45. Since then, the stock has retreated and is currently trading at Rs. 1,486.50 per equity share.
The stock has rebounded by 26 percent following the market recovery. But the stock is currently trading at 16.71 percent below its 52-week high of Rs. 1,943.95.
Company Overview:
VA Tech Wabag Ltd was founded in 1924 and is an Indian multinational company specializing in water technology solutions. The company designs, constructs, and operates water and wastewater treatment plants, offering services such as desalination, drinking water treatment, and industrial effluent treatment. VA Tech Wabag serves municipal and industrial sectors globally, providing solutions for water conservation, recycling, and reuse
Targets:
- Axis Direct has maintained a “Buy” rating on the Va Tech Wabag Limited and given a target price of Rs. 1,970, which has an upside potential of 25.39 percent.
- ICICI Direct has given a “Buy” rating on the company and set a target price of Rs. 1,870, which has an upside potential of 19.63 percent.
- Sharekhan has maintained a “Buy” rating on the company but has reduced the target price from Rs. 1,860 to Rs. 1,650, indicating an upside potential of 5.02 percent.
Management Guidance:
VA Tech Wabag expects strong growth, targeting a 15-20 percent annual revenue increase over 3-5 years. Profitability is set to improve, with EBITDA and PAT growing faster than revenue, and EBITDA margins ranging from 13-15 percent.
The company aims for a Rs. 16,000 crore order book by FY25 and expects Rs. 2,000 crore in new orders soon. With a focus on E&P projects, revenue, EBITDA, and PAT are projected to grow at 16.2 percent, 20.7 percent, and 23.7 percent annually, while ROCE is expected to reach 21.9 percent by FY27.
Additionally, VA TECH WABAG plans to invest up to USD 100 million over 3-5 years with Norfund and partners, focusing on municipal water projects while providing EPC and O&M services under its asset-light strategy.
Order Book:
Va Tech Wabag has a strong order book of Rs. 14,263.4 crores, with 58 percent in Engineering, Procurement, and Construction (EPC) and 42 percent in Operations and Maintenance (O&M). About 40 percent of the orders are international, while 60 percent come from India, showcasing its global reach and diverse projects.
Recent Order in Q3 FY25:
In the third quarter of FY25, the company won major projects, including a Rs. 3,251 crore contract to build a 200 MLD Sewage Treatment Plant in Riyadh, Saudi Arabia. They also secured an Rs. 121 crore operations and maintenance contract for an industrial wastewater plant in Bahrain, a Rs. 700 crore water treatment project in Zambia, and a Rs. 145 crore desalination pipeline project for Chennai Petroleum Corporation.
Clientele:
WABAG serves a wide range of clients in municipal, industrial, and funding sectors. Key municipal clients include Delhi Jal Board and PUB, while industrial clients include Reliance, Indian Oil, NMDC, and ONGC. The company also works with funding agencies like the World Bank, KFW, and ADB, focusing on water, oil, and power projects.
Shareholding Pattern:
Rekha Jhunjhunwala owns an 8.04 percent stake in Va Tech Wabag Limited, holding 50 lakh shares worth Rs. 742.7 crores.
Recent quarter results and ratio:
Va Tech Wabag Limited’s revenue grew by 15.88 percent, rising from Rs. 704 crore in Q3 FY24 to Rs. 811 crore in Q3 FY25. Net profit also increased by 11.11 percent, from Rs. 63 crore to Rs. 70 crore.
Va Tech Wabag Limited’s revenue and net profit have grown at a CAGR of 2.80 percent and 31.35 percent, respectively, over the last four years.
In terms of return ratios, the company’s ROCE and ROE should be 19.8 percent and 13.8 percent, respectively. Va Tech Wabag Limited has an earnings per share (EPS) of Rs. 43.1, and its debt-to-equity ratio is 0.22x.
Written By – Nikhil Naik
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