Wabag's recent order inflows indicates a strategic shift towards larger, complex and higher margin projects, indicating potential medium-term margin improvement.
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ICICI Securities Report
VA Tech Wabag Ltd.'s order inflow in Q3 FY25 stood at Rs 28 billion. The Al Haer Sewage Treatment Plant order (Rs 17.2bn) has partially allayed OI concerns post the cancellation of the 300 MLD Saudi Water Authority (SWA) tender worth Rs 27 billion (which was reopened last week with a bid submission deadline of eight weeks).
Total order book swelled to Rs 143 billion – especially, EPC OB stands at Rs 76 billion – 2.5x book-to-bill ratio. Revenue growth during the quarter was +15% YoY with domestic revenues at Rs 5 billion (Rs 6.4 billion in H1 FY25).
Wabag's recent order inflows indicates a strategic shift towards larger, complex and higher margin projects, indicating potential medium-term margin improvement.
We reiterate Byy on the stock with a revised target price of Rs 1,820 (versus Rs 1,980) at 25x FY27E earnings per share.
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