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Motilal Oswal Report

Motilal Oswal broadly maintain its earnings estimates after VA Tech Wabag Ltd.'s healthy in-line Q3 FY26 results. After delivering a CAGR of 4%/18%/28% in revenue/EBITDA/PAT over FY21-25, the brokerage estimates a CAGR of 17%/22%/23% over FY25-28.

VA Tech's current order book of over Rs 160 billion (~5x FY25 revenue), preferred bidder status in orders worth Rs 3,000 crore, and a strong bid pipeline of Rs 15,000- 20,000 crore provide strong 15-20% revenue growth visibility for the next three-four years.

A greater focus on executing large-scale projects and high-margin segments such as EP, Industrial, and operation and maintenance augurs well for margins.

The outlook for strong free-cash-flow generation, an Rs 1,000 crore + net cash status, and expansion in return ratios makes VA Tech's scrip attractive at ~17x FY27E P/E.

Hence the brokerage reiterates its Buy rating and a target price of Rs 1,900, based on 26x FY27E P/E.

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