Buy Va Tech Wabag; target of Rs 1700: Sharekhan

Sharekhan's research report on Va Tech Wabag

We visited Va Tech Wabag’s waste water treatment and desalination plants in Chennai and also had an interaction with the management. Company has maintained its guidance of 15% revenue growth and margins of 13-15% for the next 3-5 years. Order backlog stood strong at Rs. 10,676 crore at the end of Q4 and the company has also received an order of Rs. 2,700 crore in Saudi Arabia recently. The order pipeline is promising across Middle East, Africa, CIS nations, and SE Asian countries. The company has submitted bids worth Rs. 3,000 crore in Middle East and India region. Va Tech’s focus on technologically advanced EP projects, industrial and international projects, and increasing share of O&M contracts would improve margins, cash flows, and working capital cycle.

Outlook

We maintain BUY with a revised PT of Rs. 1,700, given its strong order inflow, promising pipeline, and margin tailwinds. The stock trades at a P/E of ~21.5x its FY2026E EPS.

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