Buy Va Tech Wabag; target of Rs 1764: KRChoksey

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26 Aug, 2025 12:21

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KRChoksey's report on Va Tech Wabag

Wabag reported revenue of Rs. 619 crore (6.0%, YoY) below our expectation of Rs. 678 crore which is contributed by domestic sales & overseas sales Rs. 296 crore and Rs. 324 crore respectively. Wabag reported EBITDA of Rs. 42.3 crore (-4.6%, YoY, domestic Rs. 35.5 crore & overseas Rs. 6.9 crore) and margins fell by 69 bps due to low contribution from overseas market. However, overseas margins have fallen to 2.1% due to high provisioning (Rs. 10 crore) against one of ongoing project, Al Gubrah in Oman and higher employee cost on overseas project. The overseas topline grew by 1.7% primarily impacted by adverse movement of Yen as compare to dollar, Yen fell by 15% in last quarter. Wabag reported stable working capital days of 70 days from 72 days in previous quarter. Management has intact their guidance Rs 26-27bn revenue (exceptional Euro movement) & Rs. 32-34bn order inflow for full year FY15E. Order inflow guidance is flat due high base and order activities which will pick in 2HFY15.

Valuation & outlook"At CMP Rs. 1,472 the stock trades at 13x & 12x for FY15E & FY16E respectively. We used EV/ EBITDA methodology to value Wabag, assign 15.0x (Rs. 237 crore, FY17E) to domestic business at par with domestic peers and 10.0x (Rs. 82 crore, FY17E) to overseas business and derived a TP of Rs 1,764 with an upside potential of 19.8%. buy the stock with a target price of Rs 1764", says KRChoksey research report.

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