VA Tech Wabag shares up 7% today; target price hints at more upside

Shares of VA Tech Wabag Ltd climbed 7 per cent in Wednesday's trade, taking its 3-day surge to 11 per cent. The stock has been on a roll since a WABAG consortium won Rs 3,251 crore order in Riyadh, Saudi Arabia. Axis Securities today came out with a report on the stock with a 'Buy' rating and a target price of Rs 1,970.

VA Tech Wabag shares rose 7.25 per cent to hit a high of Rs 1,515.95 on BSE. Despite the recent surge, it is still down 12.35 per cent in 2025 so far. The water treatment company had secured new orders totalling over Rs 2,781 crore this quarter so far, increasing its total order book to around Rs 14,200 crore, including framework contracts. With the fresh order, the company is now likely to surpass the order book target of over Rs 16,000 crore by the end of this fiscal year, Axis Securities said.

Axis Securities expects margins for VA Tech Wabag to improve with revenue growth acceleration. The recent orders are expected to accelerate revenue growth starting FY26, it said.

VA Tech Wabag's management has guided for a 15-20 per cent revenue CAGR over the next three to five years. The sustained revenue growth and improving product mix are also expected to drive profit margins higher in the medium term, Axis Securities said.

It noted that the company has now been net cash positive for the eighth consecutive quarter, with a net cash position of Rs 263 crore as of Q3FY25. It continues to focus on reducing working capital requirements and expects further improvement in the
coming quarter.

The management anticipates strong revenue growth driven by India and MEA, projecting a CAGR of 15-20 per cent over the next 3-5 years. Ebitda and PAT growths are expected to outpace revenue growth, while Ebitda margins is seen ranging between 13 per cent and 15 per cent and potentially exceeding the upper end of this guidance.

"The company currently holds a robust order book and aims to surpass Rs 16,000 crore by FY25, and targets order book 3 times of revenue in the medium term. The targeted revenue mix, which includes over 50 per cent from international projects, 30 per cent from industrial customers, 20 per cent from O&M, and one-third of EPC being EP projects, is expected to contribute to margin improvement," Axis Securities said.