Buy VA Tech Wabag; target of Rs 1900: Motilal Oswal

Buy

Motilal Oswal's research report on VA Tech Wabag

VA Tech Wabag (VATW) reported decent results in 2QFY26 as its revenue/adjusted EBITDA/PAT grew 19%/17%/20% YoY, 2-14% ahead of our estimates. Reported EBITDA declined 5% YoY, with a 10.7% EBITDA margin. However, adjusted to the forex gain of INR312m, which the company considers part of its continuing business, EBITDA margin stood high at 14.4%. In 1H, revenue/adj. EBITDA/PAT grew by a healthy 18%/17%/20% YoY. Adj. EBITDA margin stood at 13.8%, well within its guided range of 13-15%. Net cash position was maintained with INR5.6b at 1H-end (INR6.7b excluding HAM Projects).

Outlook

The outlook for strong FCF generation, a net cash status, and expansion in return ratios makes VATW’s scrip attractive at ~19x FY27E EPS. We, thus, reiterate our BUY rating and a TP of INR1,900, based on 26x FY27E P/E (~+1SD on an improved outlook).

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VA Tech Wabag_11112025_Motilal Oswal