Strong order book supports robust outlook
We remain constructive on VA Tech Wabag’s (VATW) prospects on the back of regular order inflows and a robust book-to-bill ratio of ~4.6x. In Dec’25, VATW secured a large repeat order worth up to ~INR7b from Saudi Water Authority for a technologically advanced 50 MLD BWRO Plant at Aljouf, Saudi Arabia, and was also declared the preferred bidder by the Saudi Water Partnership Company (SWPC) for the Hadda Independent Sewage Treatment Plant (ISTP) Project. Earlier in Nov’25, it secured a large repeat order from Melamchi Water Supply Development Board, Nepal, for design, build and operate (DBO) of Sundarijal Water Treatment Plant with a capacity of 255 MLD in Kathmandu Valley, funded by the Asian Development Bank (ADB). The ultra-pure water segment is an emerging segment and is expected to be an INR35b opportunity for VATW.
Valuation and view: Reiterate BUY
After delivering a CAGR of 4%/18%/28% in revenue/EBITDA/PAT over FY21-25, we estimate a CAGR of 17%/22%/23% over FY25-28 for VATW.
Its greater focus on executing large-scale projects in high-margin segments such as EP, Industrial, and O&M augurs well for margins.
The outlook for strong FCF generation, a net cash status, and expansion in return ratios makes VATW’s scrip attractive at ~17x/~14x FY27E/28E P/E. We, thus, reiterate BUY rating and a TP of INR1,900, based on 26x FY27E P/E (~+1SD on an improved outlook) (our IC note dated Jul’25).
