Sharekhan's research report on Va Tech Wabag
Q1FY2024 performance was commendable on the profitability front as margin expanded and profits rose considerably. Order backlog stands at Rs.11,348 crore (3.9x TTM revenue) and order pipeline is promising across India, Russia, Middle East, and other African countries. Va Tech’s focus on technologically advanced EP projects and increasing share of O&M contracts would improve margins, cash flows, and working capital cycle. We build in revenue/adjusted PAT CAGR of ~20%/~24% over FY2023-FY2025E. The stock trades at an attractive P/E of ~10x its FY2024 and ~9x its FY2025E EPS.
Outlook
We maintain Buy on Va Tech Wabag (Va Tech) with a revised PT of Rs. 630, given its strong order inflow, promising pipeline, and margin tailwinds.
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