MOFSL upbeat on Va Tech Wabag despite Middle East tensions; sees 54% upside

Va Tech Wabag is well-positioned for sustained growth, with regular order inflows and normal project execution in the Middle East despite current escalating tensions

Va Tech Wabag share price today: Brokerage firm Motilal Oswal Financial Services (MOFSL) has maintained its 'Buy' rating on Va Tech Wabag, a water treatment solutions provider. The company is well-positioned for sustained growth, with regular order inflows and normal project execution in the Middle East despite current escalating tensions, the brokerage said.

 

After delivering a CAGR of 4 per cent, 18 per cent, and 28 per cent in revenue, EBITDA, and PAT, respectively, over FY21–25, analysts expect Va Tech Wabag to post a CAGR of 17 per cent, 22 per cent, and 23 per cent, respectively, over FY25–28. The brokerage highlighted the strong free cash flow generation, net cash position of ₹8.9 billion, and improving return ratios, making the stock attractive at around 18x/15x FY27E/FY28E P/E.

 

 

MOFSL has set a target price of ₹1,900, based on 26x FY27E P/E, reflecting roughly +1 standard deviation on an improved outlook. The target implies a potential upside of 54 per cent from Thursday, March 12, closing price of ₹1,279.5 on the NSE. 

 

Around 10:20 AM, shares of Va Tech were trading at ₹1,245, down 2.7 per cent. The stock touched an intraday low of ₹1,241.5 on the NSE. In comparison, the benchmark NSE Nifty 50 was quoting at 23,330 levels, down by 310 points or 1.33 per cent.  

Here's why MOFSL is bullish on Va Tech Wabag:

Strong order inflows, profitable growth drive outlook

MOFSL said Va Tech Wabag has received a contract worth over ₹1,000 crore from Chennai Metropolitan Water Supply and Sewerage Board for the refurbishment and O&M of a 45 MLD TTRO plant in Chennai. It has a strong order book of over ₹16,300 crore, roughly five times its FY25 revenue. Additionally, the company has preferred bidder status in orders worth over ₹3,000 crore and a strong ₹150–200 billion bid pipeline (30 per cent win rate). 

 

This provides 15-20 per cent revenue growth visibility over the next 3-4 years. The brokerage noted that the company’s greater focus on large-scale projects in high-margin segments such as EP, industrial, and O&M is expected to support margin expansion.

Middle East projects continue smoothly

According to Motilal Oswal, overseas projects accounted for 50 per cent of Va Tech Wabag’s revenues for the April-December period of fiscal 2026 (M9FY26) and 60-70 per cent of its order book, with a significant share from the Middle East. Project execution has remained normal despite regional tensions, and business continuity is expected to be maintained given the critical, non-discretionary nature of desalination plants.    Disclaimer: Views and outlook shared belong to the brokerage/analysts and are not endorsed by Business Standard. Readers' discretion is advised.