Motilal Oswal continues to back VA Tech Wabag, citing a robust order book, diversified growth, and consistent net cash with a new target price following a quarter marked by international projects and healthy financials.
Motilal Oswal has kept its positive view on VA Tech Wabag after a quarter that did more than just deliver a headline order-book milestone. According to the Trade Brains report, the water-treatment specialist paired a stronger pipeline with firmer revenue, better profitability and continued net cash strength, all of which helped reinforce the broker’s case for the stock.
The company’s latest quarter showed broad-based growth rather than dependence on a single line of business. Consolidated revenue rose to Rs 886.8 crore, EBITDA increased to Rs 116.3 crore and profit after tax climbed to Rs 90.1 crore, with margins holding near 13%. The gain was helped by EPC work, international projects, industrial contracts and operations and maintenance business, which suggests a healthier mix than a one-off spike in any one segment.
What has caught investors’ attention most is the order book, which has risen to about Rs 19,400 crore. The company added more than Rs 3,400 crore of fresh business in the quarter, including its first desalination order in Kuwait, a sewage treatment project in Ajman in the United Arab Emirates, a new project in Austria and further work with long-standing clients in Bengaluru and Delhi. Earlier Moneycontrol reports on Motilal Oswal’s view had pointed to an order book of more than Rs 16,300 crore and a strong bid pipeline, underlining how the broker’s conviction has been built around recurring inflows as well as scale.
The balance-sheet picture is also helping the investment case. Trade Brains said Wabag has remained net cash positive for 14 straight quarters, with net cash close to Rs 965 crore at the end of the latest period. That matters in a capital-intensive project business, where funding needs and execution risk can quickly affect returns. Motilal Oswal’s latest call, as reported by Trade Brains, values that combination of growth visibility, a technically richer project mix and stronger cash generation, assigning the stock a target price of Rs 2,529. Earlier Moneycontrol reports had quoted a lower Rs 1,900 target, but the broader message from the broker has been the same: execution over the next few quarters will decide whether the large order book turns into sustained earnings growth.
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