Accumulate VA Tech Wabag; target of Rs 1571: Geojit Financial Services

Geojit Financial Services research report on VA Tech Wabag

VA Tech Wabag (VATW), is a Chennai-based multinational company specialising in water technology. With its expertise in the turnkey execution and operation of water and wastewater treatment plants, the company primarily serves both municipal and industrial sectors, focusing on providing comprehensive solutions for water-related challenges. Q3FY25 revenue stood at Rs.811cr., registering 15.1% YoY growth driven by EPC municipal/O&M Municipal/O&M industrial segments. With this the 9Mrevenues are at Rs.2,198cr.(11.2%YoY). Strong order intake of Rs.2,781.3cr. In this quarter with notable inflow in O&M industrial segment. Order intake for 9MFY25 is at Rs.5,075cr. Registering 188.1% YoY growth. Revenue visibility remains strong with the current orderbook at Rs.13,103cr. (excluding framework contracts) , implying 4.6XTTM revenue. O&M contribution to revenue mix increased by 263bps, contributing about 19% of the total revenues, in-line with VATW’s envisioned strategy. However, higher cost of sales impacted margins which came in lower than expectations. Gross/EBITDA margins registered 202/166bps contraction while PAT registered 23bps contraction, as margin contraction was partially offset by higher other income.

Outlook

Therefore, we value the stock at 22.5XFY27EPS of Rs.69.8 to set a target price of Rs.1,571 and upgrade to ACCUMULATE rating.

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