Motilal Oswal Financial Services (MOFSL) has reaffirmed a bullish stance on VA Tech Wabag (VATW), India’s leading water technology company, assigning a ‘BUY’ rating with a target price of INR 1,900, implying a 57% potential upside from the current market price of INR 1,209.
The brokerage’s conviction is grounded in Wabag’s record-high order book, healthy margin trajectory, and strategic positioning in the global water infrastructure value chain—a sector gaining structural momentum amid increasing emphasis on sustainable resource management worldwide.
Rekha Jhunjhunwala’s Long-Term Bet: A Decade-Defining Investment
One of the most notable endorsements of VA Tech Wabag’s long-term potential came from renowned investor Rekha Jhunjhunwala, who holds 50 lakh shares (8.03% stake) in the company, valued at approximately INR 602.9 crore as of January 2026.
Jhunjhunwala first entered Wabag’s shareholder register in September 2020, when the stock traded between INR 190–200 per share. Since then, her investment has grown nearly tenfold, with the stock touching an all-time high of INR 1,905.90 in December 2024. Even after recent consolidation to the INR 1,209 range, her position remains a multi-bagger success story—symbolic of patient, conviction-driven investing in India’s underappreciated engineering and infrastructure sector.
Her continued holding underscores institutional confidence in Wabag’s execution strength, balance sheet discipline, and unique positioning in the global desalination and wastewater management space.
Record Order Book and Expanding Global Footprint
As of December 2025, VA Tech Wabag’s order book stands at over INR 16,000 crore, translating to a book-to-bill ratio of 4.6x—its strongest ever. With preferred bidder status for another INR 3,000 crore and a robust bidding pipeline worth INR 15,000–20,000 crore, the company enjoys 3–4 years of revenue visibility at a projected growth rate of 15–20% annually.
The company’s recent wins highlight its increasing international relevance:
- A repeat order of up to INR 700 crore from the Saudi Water Authority for a 50 MLD brackish water RO plant in Aljouf.
- Preferred EPC partnership for the Hadda ISTP Project under the Saudi Water Partnership Company (SWPC).
- A 255 MLD water treatment plant in Kathmandu, Nepal, funded by the Asian Development Bank (ADB).
Additionally, ongoing execution of mega-projects such as the 400 MLD Chennai desalination plant (INR 2,560 crore) and Yanbu desalination plant (INR 2,100 crore) continues to strengthen Wabag’s international delivery track record.
Transition to High-Margin, Technology-Led Segments
Historically, Wabag’s earnings were driven by EPC contracts, which are volume-heavy but margin-thin. The company’s evolving focus on high-margin O&M and industrial segments, coupled with the use of proprietary technologies and strategic regional partnerships, is expected to lift EBITDA margins to 14–15% by FY28.
Motilal Oswal notes that the O&M segment’s share in total revenue has climbed from 15% in FY21 to nearly 20% in FY26E, while the industrial segment—a key driver of premium margins—is expanding its contribution to the top line.
Financial Outlook: Strengthening Fundamentals and Cash Flow
Between FY21 and FY25, VA Tech Wabag delivered 4% CAGR in revenue, 18% in EBITDA, and 28% in PAT, reflecting operational recovery post-COVID disruptions. For FY25–FY28, Motilal Oswal forecasts 17% revenue CAGR, 22% EBITDA CAGR, and 23% PAT CAGR, driven by strong order execution and improved mix.
Key projections include:
| Metric | FY26E | FY27E | FY28E |
|---|---|---|---|
| Sales | 3,860 | 4,490 | 5,240 |
| EBITDA | 510 | 640 | 760 |
| Adj. PAT | 390 | 450 | 540 |
| EPS (₹) | 62.8 | 73.1 | 87.9 |
| RoE (%) | 15.6 | 15.6 | 16.1 |
| P/E (x) | 20.2 | 17.4 | 14.5 |
With a net cash balance of INR 670 crore (excluding HAM projects) and consistent free cash flow generation, Wabag stands out as one of the few EPC firms with a deleveraged balance sheet.
The brokerage also highlights that bad debt provisioning has dropped sharply in recent years, reflecting improved client selection and project funding structures—most of which are now backed by sovereign entities or multilateral agencies.
Valuation and Market Rerating Potential
At ~17x FY27E P/E, VA Tech Wabag trades at a discount to its five-year average multiple. Motilal Oswal assigns a target multiple of 26x FY27E EPS, valuing the stock at INR 1,900, which represents +1 standard deviation above the long-term mean—justified by its structural shift toward quality growth, higher margins, and superior return ratios.
The report emphasises that Wabag’s free cash flow profile, debt-free status, and consistent bid-win execution ratio make it one of the most compelling plays in India’s broader infrastructure and sustainability theme.
Thematic Tailwinds: Water Infrastructure as a Critical Global Priority
Globally, the water and wastewater treatment market is forecast to reach USD 490 billion by 2030, growing at 6–8% CAGR. India’s own Jal Jeevan Mission, urban rejuvenation projects, and industrial water reuse mandates provide a sustained domestic growth runway.
Motilal Oswal expects Wabag to benefit from these trends, particularly as it expands into the ultra-pure water segment, a fast-emerging niche catering to semiconductors, pharmaceuticals, and advanced manufacturing—estimated to be an INR 3,500 crore opportunity for the company.
Conclusion
Between Motilal Oswal’s bullish projections and Rekha Jhunjhunwala’s long-standing conviction, VA Tech Wabag has evolved from an overlooked mid-cap EPC player into a global water technology powerhouse.
Its combination of steady earnings visibility, expanding global footprint, healthy balance sheet, and increasing focus on high-margin segments makes it one of the most credible compounding stories in India’s infrastructure space.
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