Multibagger stock: Shares of VA Tech Wabag Ltd climbed 5 per cent in Monday's trade following its September quarter results, as a large This order inflow resolved concerns on growth.
The company's revenue for the quarter grew 5 per cent YoY, while its Ebitda margin was at 13.4 per cent, up 50 basis points YoY. Ebitda growth came in line with VA Tech Wabag's guidance of 13–15 per cent for FY25. Profit from associates was up 17 per cent YoY.
On Monday, the stock rose 4.66 per cent to hit a high of Rs 1,775 on BSE. The multibagger stock is up 179 per cent in 2024 so far and 213 per cent in the past one year.
ICICI Securities said Va Tech Wabag’s profit performance and guidance of sustained high Ebitda margin have led it to believe that the company would be in a favourable position going forward.
The management has also guided for 15 per cent revenue growth for FY25, and Ebitda margin of 13–15 per cent. The brokerage said it believes the guidance is well within the reach and is likely to fructify.
ICICI Securities said Va Tech Wabag’s management is confident of growth and its presence in the Middle Eastern market. Further, it received a major order worth Rs 2,700 crore from the Kingdom of Saudi Arabia. Va Tech Wabag expects growth to continue further in Middle Eastern markets.
The company has guided for an order backlog of three years and has submitted bids worth Rs 8,400 crore.
"Middle Eastern and international markets have performed well in terms of OI and execution. We also expect domestic execution to pick up in H2FY25E. We maintain BUY with a revised target of Rs 1,980 (Rs 1,541 earlier), valuing FY27E EPS at 25 times," ICICI Securities said.
The broking firm said Va Tech Wabag's total orderbook increased to Rs 14,600 crore, with the EPC orderbook at Rs 8000 crore, 2.7 times book-to-bill ratio. As a result, it expects Va Tech Wabag's revenue to grow 20 per cent CAGR in the medium term (FY24-27E).
"We believe Wabag may meet Rs 9,000-1,0000 crore OI guidance in FY25E which could lead to further re-rating led by the Middle-East desalination prospects. Q2 revenue growth was a tad disappointing but margins continue to surprise positively," it said.