During Tuesday’s trading session, the shares of a leading pure-play water technology Indian Multinational Group and a global leader in the water industry surged nearly 2 percent to hit an intraday high at Rs. 1,729.3 on BSE.
Over the past three months, from 1st August 2024 to the present date, Va Tech Wabag Limited has secured orders worth more than Rs. 4,400 crores.
Stock Performance:
With a market cap of Rs. 10,561.5 crores, the shares of Va Tech Wabag Limited opened in the green at Rs. 1,719.95, up by nearly 1.4 percent, as against its previous closing price of Rs. 1,695.5.
The stock has delivered multibagger returns of nearly 192.6 percent in one year, and around 70 percent of positive returns in the last six months. So far in 2024, the shares of VA Tech Wabag have given multibagger returns of about 166.4 percent.
Orders in last 3 months:
10th August: Va Tech Wabag secured a Rs. 415 crore repeat order from the Chennai Metropolitan Water Supply and Sewage Board (CMWSSB) for the Operation & Maintenance (O&M) of 110 MLD SWRO Desalination Plant at Nemmeli, Chennai.
This follows the completion of Wabag’s initial O&M contract in 2021, which was extended, and now the company has won the tender for a further 7 years of O&M.
6th September: The company received a ~$317 million (~Rs. 2,700 crores) order in the Middle East region from the Saudi Water Authority for the EPCC of a 300 Million Litre per Day (MLD) Mega Sea Water Reverse Osmosis (SWRO) Desalination Plant in Yanbu, Kingdom of Saudi Arabia.
10th October: The company bagged ‘large’ repeat orders from Reliance Industries Limited for the Water Treatment System at its Dahej and Nagothane facilities.
NOTE: The ‘large’ orders are in the range of Rs. 300-500 crores.
15th October: The company was awarded a Rs. 1,000 crores mega order from Indosol Solar Pvt. Ltd. to design, engineer, supply, install, test and commission a 100 MLD Desalination Plant in Andhra Pradesh. The project, set to be executed in 38 months, includes a 15-year O&M contract.
The plant will support Indosol Solar’s 10 GW integrated Solar PV manufacturing unit with energy-efficient desalination technology in Andhra Pradesh. This order marks WABAG’s entry into providing water security for the Solar PV sector.
Financials:
Va Tech Wabag reported a marginal growth in consolidated revenue from operations, experiencing a year-on-year increase of nearly 5.3 percent, rising from Rs. 665 crores in Q2 FY24 to Rs. 700.3 crores in Q2 FY25.
During the same period, the company’s net profit rose by 17 percent YoY, from Rs. 60.2 crores to Rs. 70.6 crores, driven by debt control and improved operating margins.
EBITDA for Q2 FY25 increased by 5.5 percent YoY to Rs. 103 crores, up from Rs. 97.6 crores in Q2 FY24, with the EBITDA margin stable at 14.7 percent. The growth was supported by EP, International, Industrial & Advanced Technology projects.
Order Book:
As of Q2 FY25, the company’s order book reached a record Rs. 14,600 crores, including Framework contracts, with around 4x revenue visibility. The order book consists of a balanced mix of EPC and O&M projects both in India and internationally. Meanwhile, its order intake stood at Rs. 4,607 crores.
Notably, the company has already secured over Rs. 4,500 crore of order intake this quarter, against the Rs. 6,000 crore preferred bidder status in projects discussed in the previous investor call.
Va Tech Wabag is also a preferred bidder in some large Marquee Projects worth more than Rs. 3,500 crores. The strong order book is supported by funding from Federal Governments, Multilaterals and Payment Securities.
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Future Outlook:
The management has set a medium-term outlook for the next 3-5 years, projecting a revenue growth of 15-20% CAGR, an order book three times the revenue, EBITDA margins of 13-15%, RoCE above 20%, O&M contributing 20% of total revenue, RoE over 15%, and a net cash-positive position.
Currently, the company has achieved an 11% YoY revenue growth, with a highest-ever order book of over Rs. 14,600 crores. In H1 FY25, EBITDA stood at 13.9% of revenue, RoCE at 18.3%, O&M accounts for 19% of revenue, RoE isat 14.6%, and the company is net cash positive with Rs. 222 crores.
Key Financial Ratios:
In terms of key financial metrics, Va Tech Wabag currently has reported a Return on Equity (RoE) of 14.6 percent and a return on capital employed (RoCE) of 18.3 percent in Q2 FY25, due to creating long-term Shareholder Value and driven by Asset Light Business Model, respectively. Additionally, the company’s debt-to-equity ratio stands at 0.22.
About the company:
Founded in 1924, Va Tech Wabag Limited, one of the world’s leading companies in the water treatment sector, is engaged in the business of design, supply, installation, construction, O&M of drinking water, waste water treatment, industrial water treatment and desalination plants including production of energy from biogas and sludge management.
Va Tech Wabag is 3rd largest private water operator and 5th top desalination plant supplier, with a presence in over 25 countries, and core expertise in Engineering & Procurement (EP), with an Asset Light Model.
Written by Shivani Singh
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