VA Tech Wabag shares take a knock but it may still be the best year since 2014 – CNBC TV18

VA Tech Wabag shareholders were set for the best year in the company’s history before a jolt from Saudi Arabia knock shaved off a good 16% of the stock in early trade on December 18. The shares recouped a third of the early losses by midday and this might still be the best year for the stock since 2014.

The ₹10,000-crore water treatment solutions company had a ₹2,700 crore desalination order from the Saudi Arabian government, which was cancelled a day earlier. The Saudi government order was about 18.5% of the total orderbook of ₹14,600 crore at the end of September 2024, the highest ever in the Chennai-based company’s history.

Chairman and Managing Director Rajiv Mittal had projected the company’s total order book to cross ₹16,000 crore by the end of March 2025, in a conference call with analysts on November 14.

57% of the company’s new orders between April and September 2024 came from overseas. The Saudi order accounted for about half of all overseas orders.

The international orders contributed in a big way to the 7% jump in consolidated total income in the first half of the financial year. The investor presentation projected the order book to be three times the revenue in the next 3-5 years and 13% to 15% earnings before interest, tax, depreciation, and amortisation (EBITDA).

The company’s EBITDA margin was 14.7% for the latest second quarter, and 13.9% for the first half of the financial year.

VA Tech Wabag’s order backlog grew 28% in the first six months of the current financial year ending March 2025. These are the biggest orders on the VA Tech Wabah already has:

Mittal has been excited about the growing opportunity in desalination in global markets. “We have 40,000-50,000 of salt in a seawater, we bring it down to 200-300 and now ultra-pure water, we’ll have to bring that 200-300 down to what is required by client, some may insist for 5, 10, 20, that is what we say is ultra-pure water. We see a huge transaction in ultra-pure water, UPW as we call it short form. And you will see in the next few years, this business will really pick up globally,” he said in the November conference call.

Stock data as of 11:30 am on December 18.

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