VA Tech Wabag Aiming For 13–15% Ebitda In Medium Term: CFO
In FY26, greater importance will be attached to larger, technically complex projects over smaller, low-value contracts, says Skandaprasad Seetharaman.
VA Tech Wabag Ltd. is expected to maintain an Ebitda of 13% to 15% in the medium term, according to Chief Financial Officer Skandaprasad Seetharaman.
"There's nothing to indicate that we cannot be a continually operating cash flow generating company," he told NDTV Profit in a conversation. "With the medium-term outlook, we are looking at moving forward to the 15% to 20% CAGR, 13% to 15% Ebitda, remaining net-cash positive and delivering a 15% and over ROE."
The planned margin improvement will stem from several factors. "One is, of course, the higher international mix that we have been moving towards," said Seetharaman.
Other factors include the engineering and procurement strategy that "we took, where we defocus from construction and a higher focus towards industrial", and an expected "Ebitda kicker", which will come out of operations and maintenance, he explained.
Currently, 62% of the order book is from India, with the remaining 38% coming from international markets. The company's operating cash flow to Ebitda ratio surged to 79% in FY25, up from 36% in FY24.
He highlighted VA Tech Wabag's five consecutive years of net cash positivity and a free cash flow of Rs 300 crore to Rs 350 crore in FY25. This was underpinned by strategic shifts initiated last year.
One of the key aspects which will aid margin improvement is the water treatment company's increased focus on industrial projects, according to the CFO.
In FY26, greater importance will be attached to larger, technically complex projects over smaller, low-value contracts. The company has already secured preferred bidder status for orders worth Rs 3,000 crore. These are expected to materialise in the coming months.
The company ended FY25 with gross cash reserves of nearly Rs 1,000 crore and approximately Rs 700 crore in net cash. VA Tech Wabag recently secured a $370 million order in collaboration with a consortium partner.
"So, our ticket sizes are significantly going up… And all the orders that we are looking at today, and our focus area is mainly the Middle East and Africa, where the ticket sizes are much bigger than in India," he said.
