VA Tech Wabag - A Watershed Moment: ICICI Securities

ICICI Securities Report

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VA Tech Wabag Ltd. bagged a mammoth order of Rs 27 billion (equivalent to its FY24 revenue) from the Middle East for a desalination plant – the entire order is for EPC. As a result, Wabag’s EPC order book is now close to Rs 79 billion or more than three times book to bill ratio. Order inflow has been a concern for the last 18 months – FY24/Q1 FY25 order inflow undershot Street’s expectations (lower than revenues).

At the beginning of the fiscal, management had indicated a good bidding pipeline from Middle East. It had also pre-qualified to bid for Egyptian desalination contracts to bid up to 1000mld. Note – Middle East/Egypt have a strong pipeline of desalination contracts.

Wabag has shed the flab, cleaned up its balance sheet and improved its margin over the last 24 months. Retain Buy; target price revised to Rs 1,541 (versus Rs 1,445).

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