Sharekhan's research report on Va Tech Wabag
Adjusted profit increased 7% y-o-y to Rs. 63 crore, supported by decent revenue growth of 8.1% y-o-y, steady margin, and higher other income partially offset by higher taxes. Order backlog stands at Rs. 11,866 crore (4.1x 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, industrial and international 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 ~9%/~18% over FY2023-FY2026E.
Outlook
We maintain BUY with a revised PT of Rs. 850, given its strong order inflow, promising pipeline, and margin tailwinds. The stock trades at an attractive P/E of ~12x its FY2026E EPS.
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