Motilal Oswal's research report onVA Tech Wabag

Motilal Oswal's research report onVA Tech Wabag

VA Tech Wabag (VATW) remains well-positioned for sustained growth, aided by regular order inflows (INR34.3b added in 1Q) and normal project execution, including in the war-affected Middle East. The company’s current order book of ~INR200b (~5x FY26 revenue) and a strong bid pipeline provide visibility into ~20% revenue growth over the next 3-4 years. The focus remains on profitable growth and overseas markets. After delivering a CAGR of 7%/17%/28% in revenue/EBITDA/ APAT over FY21-26, we estimate a CAGR of 19%/26%/23% over FY26-28. Strong FCF generation, net cash of INR10b+, and improving return ratios (pre-tax RoCE/RoIC of 23%/ 36% in FY28E) make VATW attractive at ~21x FY28E P/E.

We reiterate our BUY rating on the stock with a TP of INR2,529 (based on 28x FY28E P/E).

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