Synopsis: The share of this company is in focus after Motilal Oswal maintained a Buy rating with a Rs 1,900 target price, supported by a strong Rs 16,300 crore order book, steady order inflows, and robust earnings growth visibility.
This article outlines the rationale behind the upside potential in this water treatment stock, highlighting factors such as strong order inflows, a robust order book, improving earnings visibility, attractive valuation, and stable execution across domestic and international projects.
With a market capitalization of Rs 7,666 crore, Va Tech Wabag Ltd’s stock closed at Rs. of Rs 1,228 up from its previous day’s close price. The share of this company has given a return of 397 percent over the last five years.
Brokerage View
Motilal Oswal Financial Services has maintained a Buy rating on the stock with a target price of Rs 1,900, implying an upside potential of around 54.72 percent from current levels. The brokerage remains positive on the company’s growth outlook and earnings visibility.
Attractive Valuation: The stock currently trades at around 18x FY27E and 15x FY28E P/E, which Motilal Oswal considers attractive relative to the company’s growth outlook. The valuation reflects a favourable risk-reward profile, supported by improving earnings visibility and the company’s ability to sustain growth over the medium term.
Strong Earnings Growth Visibility: Motilal Oswal expects the company to deliver robust financial performance, projecting revenue, EBITDA, and PAT CAGRs of 17 percent, 22 percent, and 23 percent respectively, between FY25 and FY28. This growth outlook is supported by steady order inflows, operational efficiency, and operating leverage as project scale expands.
Stable Order Flow and Middle East Execution: Consistent order inflows along with smooth project execution in the Middle East are expected to provide strong revenue visibility for the company. Despite geopolitical tensions in the region, the company continues to maintain a stable project pipeline, supporting sustained business momentum and improving revenue predictability.
Medium-Term Financial Outlook and Execution Progress: The company’s medium-term outlook remains supported by strong operational performance and a robust order pipeline. With an order book of over Rs 163 billion, nearly four times revenue, it has strong visibility. Revenue growth of 18.3 percent and EBITDA margins of 13.7 percent remain aligned with the company’s long-term targets.
Return on Equity stands at 15.3 percent, already meeting the company’s goal, while RoCE at 18.9 percent remains slightly below the 20 percent target under its asset-light model. O&M contributes 18 percent of revenue, nearing the 20 percent target, while the company continues to maintain a strong net cash position.
Va Tech Wabag Ltd is engaged in the business of the water treatment field. Its principal activities include design, supply, installation, construction, and operational management of drinking water, wastewater treatment, industrial water treatment, and desalination plants.
Financial Highlights: The revenue from operations grew by 19 percent to Rs 961 crore in Q3 FY26 from Rs 811 crore in Q3 FY25, and EBIDT grew by 24 percent to Rs 122 crore in Q3 FY26 from Rs 97.7 crore in Q3 FY25. Accompanied by a net profit growth of 36 percent to Rs 91.3 crore in Q3 FY26 from Rs 70.2 crore in Q3 FY25, resulting in an EPS growth of 30 percent to Rs 14.72 per share in Q3 FY26.
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