VA Tech Wabag remains a compelling play on India’s water infrastructure and sustainability themes, supported by margin expansion, a robust order pipeline, and exposure to high-growth sectors such as data centers, semiconductors, solar cell manufacturing, and green hydrogen.
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Yes Securities Report
Yes Securities reaffirms a Buy rating on VA Tech Wabag Ltd. with a revised target price of Rs 2,100, implying a 55% upside from the current market price of Rs 1,356.
VA Tech Wabag, a global leader in water and wastewater treatment solutions, is on track to deliver robust growth and margin improvement despite recent stock underperformance.
Margins to improve in coming quarters:
The company has secured several large projects in recent quarters, but the high-margin phases of these projects are yet to meaningfully contribute to revenues.
For example, Engineering and Procurement revenue recognition for Yanbu-al-Bahr, Indosol, and the Lusaka Water Supply project (Zambia) has not yet commenced, while material procurement-linked revenues for the Al Haer project are also pending.
We believe margins will see a significant uplift led by revenue recognition for these higher-margin components as well as operating leverage – which can take margins above the historical ranges.
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