Robust Order Book Ensures Strong Revenue Visibility
Summary
Amid a globally uncertain and challenging environment marked by inflation, currency fluctuations, and geopolitical tensions, VA Tech WABAG Ltd. delivered a resilient operational performance in FY25. The company secured new orders worth approximately Rs 5,700 Cr, reinforcing its healthy order book at Rs 13,667 Cr, reflecting a 21% YoY growth. WABAG continued to execute complex water infrastructure projects across diverse geographies while maintaining its asset-light business model and a focus on technology-led, high-margin segments.
This performance is underpinned by the company’s long-term strategic framework, “Wriddhi”, which has consistently driven both profitable growth and execution excellence. The company remains committed to delivering sustainable and customer-centric water solutions globally.
Key Highlights
• Financial performance: The company’s revenue in FY25 improved by 15% YoY to Rs 3,294 Cr, powered by strong execution across domestic and international markets. It closed the financial year with an order book of Rs 13,667 Cr, a growth of 21% YoY.
• EBITDA margins moderated: During FY25, the company recorded EBITDA of Rs 422 Cr (vs Rs 376 Cr in the previous year), registering an increase of 12% over FY24. The EBITDA Margin stood at 12.8% (vs. 13.2% in the previous year), declining slightly but remaining close to the company’s guided range. PAT rose to Rs 295 Cr, in line with the company’s focus on maintaining profitable growth.
• New initiatives: The company formed a strategic alliance with Peak Sustainability Ventures to establish 100 Bio-CNG plants. Secured a large desalination project from the PV Solar sector, highlighting WABAG’s growing presence in sunrise industries. The company also partnered with Pani Energy, a tech leader in AI/ML-based solutions, to drive digitalisation and operational intelligence across its treatment plants.
Key Developments: a) Biogas to Bio-CNG; b) PV Solar, Semiconductor & Green H2; c) Digitisation (AI for Operational Excellence); d) Blue seed initiative
Key Growth Drivers: a) “Wriddhi” Business Strategy; b) Water Recycling and Desalination Market Tailwinds; c) Sustainability and water stewardship; d) Technological advancements in water processing; e) Urbanisation and infrastructure development; f) Increased focus on industrial water solutions
Key Strengths: a) Global Presence; b) Diverse Solution Portfolio; c) Sustainability leadership; d) Robust order book; e) Strong Governance & ESG.
Key Strategies moving forward: a) Capitalising on Policy-Driven Infrastructure Spending; b) Sharpening Cluster-Led Execution Focus; c) Scaling Long-Term O&M Revenue Streams; d) Addressing the Industrial Demand Shift; e) Expanding Participation in Emerging Segments; f) Building on Digital and Delivery Synergies; g) Traction in the Middle East and CIS countries; h) Opportunities in Semiconductors and Green Hydrogen Market
Outlook & Recommendation:
The company is targeting an order book equivalent to 3 times its revenue and anticipates revenue growth at a CAGR of 15%–20% over the next 3–5 years. The targeted revenue mix— comprising over 50% from international projects, 30% from industrial customers, 20% from O&M, and one-third of EPC being EP projects—is expected to drive margin improvement. Consequently, EBITDA/PAT growth is projected to outpace revenue growth, with EBITDA margins ranging between 13%–15%. The company held a robust order book of ~Rs 13,700 Cr as of FY25-end.
We remain positive about the company’s long-term prospects as sectoral tailwinds are expected to continue in the foreseeable future, and Wabag is well placed to tap the opportunity. The company is focusing on improving the quality of revenue by choosing projects with low payment risks and good profitability. It is also working towards improving the revenue mix and reducing working capital requirements, which should support improvement in margins. We value the company at 21x FY27E EPS to arrive at a TP of Rs 1,920/share, implying an upside potential of 27% from the CMP. We maintain our BUY rating on the stock.
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