Buy VA Tech Wabag; target of Rs 828: SPA Securities

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26 Aug, 2025 12:21

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SPA Securities‘ research report on VA Tech WabagVA Tech Wabag reported below than expected profitability numbers owing to muted execution in key overseas projects and increased interest burden (to fund working capital). Consolidated revenues increased by 18.8% YoY entirely driven by 41.0% surge in domestic revenues as overseas revenue remained flat at INR 2741 mn. Margins improved by 81 bps YoY to 7.1%. Order inflows remained strong as Wabag booked orders worth INR 30.8 bn in H1FY16 (+2.8x YoY). Long term story in Wabag continues to remain intact with rising focus on clean water for drinking as well as better effluent treatment. We retain our BUY rating on the stock with a target of 828.Outlook & ValuationWABAG with presence across the value chain of water spectrum is the best play on water scarcity theme. Superior return ratios (RoCE of +20%), cash rich balance sheet, asset light business model and technological & locational advantage places it above its peers. Long term opportunity remains immense in Wabag as upcoming opportunities of over INR 700 bn (Ganga cleaning + Delhi Jal board project), alone would more than double its order backlog, even if Wabag maintains a strike rate of mere 10%. We continue to retain our BUY rating on the stock with a target of 828.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions

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