VA Tech Wabag - Strong Accretion Of Orders In FY23; Margins To See Uptick: ICICI Securities

ICICI Securities Report

Desalination is gaining foothold in India and VA Tech Wabag Ltd. has the largest market share in building and operating desalination plants in the country.

It was the engineering, procurement and construction contractor for the country’s largest desalination plant, in Nemmeli, Chennai, for which it is also doing operations and maintenance.

View and Valuation:

Ordering opportunity in the water segment is likely to remain strong on back of:

1. Namami Gange phase-II project,

2. order inflow from industries due to ‘zero liquid discharge’ requirements,

3. pick-up in water desalination and water treatment plants in overseas markets, especially Middle East and Russia.

Va Tech Wabag is looking to drive growth by focusing on desalination and water reuse segments where competitive intensity is low. Moreover, the book to bill ratio of four times FY23 revenues (highest in its history) bodes well for revenue visibility.

We introduce FY25 estimates and maintain 'Buy' with revised target price of Rs 612 per share.

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