Sharekhan's research report on Va Tech Wabag
Va Tech Wabag’s adjusted net profit increased 37.4% y-o-y to Rs. 100 crore. Revenue of Rs. 1,156 crore grew 23.8% y-o-y and OPM stood at 12.2%, down 19 bps y-o-y. Order backlog stands strong at Rs. 13,667 crore. The company is also preferred bidder for Rs. ~3,000 crore worth of projects. 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. Company has guided for a revenue growth CAGR of 15% and margin guidance of 13-15% for the next 3-5 years.
Outlook
We maintain BUY with a revised PT of Rs. 1,770, valuing it at 23x its FY27 EPS. The stock trades at a P/E of ~25x/20x its FY26E/27E EPS.
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