VA Tech Wabag’s shares soared over 13% in early trading on 10 February 2025, following the news of a substantial INR 3,251 crore contract from Saudi Arabia, coupled with impressive third-quarter results. This surge underlines the company’s expanding influence within the global water treatment industry.
Saudi Arabia’s Significant Contract
VA Tech Wabag has clinched a consortium order valued at USD 371 million (~INR 3,251 crore) for the Al Haer Independent Sewage Treatment Plant (ISTP) in Riyadh. This project, awarded by Al Haer Environmental Services Company, encompasses the engineering, procurement, and construction (EPC) of a 200 MLD sewage treatment facility, complete with connections to outfall delivery systems.
The consortium includes Miahona Company as the leader, alongside Marafiq and N.V. Besix S.A. The Saudi Water Partnership Company (SWPC) will be the off-taker, ensuring the project’s alignment with Saudi Arabia’s ‘Vision 2030’ initiative, which focuses on enhancing sewage treatment to improve living standards.
Sivakumar V, VA Tech Wabag’s Regional Head of Sales and Marketing, emphasized that this contract marks a significant milestone, enhancing the company’s regional leadership and showcasing its technical prowess and partnership capabilities in major infrastructure projects.
VA Tech Wabag Q3 FY25 – Financial Highlights
VA Tech Wabag Q3 FY25 financial performance was equally commendable, showcasing growth and stability in a competitive market:
- Revenue: A year-on-year increase of 15.1% brought the revenue to INR 811 crore, up from INR 704.4 crore.
- Net Profit: Up by 11.6% to INR 70.2 crore from the previous year’s INR 62.9 crore.
- EBITDA: Jumped 6.3% to INR 105.1 crore, although the EBITDA margin saw a slight dip from 14% to 13%.
- Order Intake: An astonishing 525.4% increase with INR 2,781.3 crore in new orders.
For the nine months ending 31 December 2024, VA Tech Wabag reported a total order intake of INR 5,075 crore, an increase of 188.1% year-over-year. Revenue for this period was INR 2,137.8 crore, reflecting an 11.2% growth, with EBITDA and profit after tax increasing by 10.8% and 13.2% respectively.
Rajiv Mittal, Chairman and Managing Director, noted the company’s strategy of growth while maintaining sustainable margins, supported by a net cash position of INR 262.5 crore, marking eight consecutive quarters of positive cash flow.
The stock of VA Tech Wabag hit an intraday high of INR 1,550, reflecting a 13.5% surge. Despite this, it’s still about 20% off its peak of INR 1,943.95 from December 2024.
- Annual Performance: Up by 99% over the last year.
- Recent Trends: February saw a 5% rise after declines in the previous two months.
- Volatility: With a beta of 1.4, indicating high volatility, investors are advised to monitor key support levels.
The market’s response suggests optimism, but analysts warn of potential corrections. They see the order win as possibly drawing more institutional investment into the water infrastructure sector.
Outlook and Market Position
VA Tech Wabag is fortifying its status as a key player in water treatment solutions, with this Saudi project enhancing its Middle Eastern presence. The company is well-placed in markets prioritizing water infrastructure like India, Southeast Asia, and the Middle East.
The global push for advanced wastewater treatment, driven by urbanization and environmental policies, positions VA Tech Wabag favourably. Their emphasis on technological innovation and strategic alliances points towards sustained growth.
Conclusion
With today’s spotlight firmly on VA Tech Wabag due to its significant order and solid financials, the company’s trajectory looks promising. Investors are keeping a close watch for further developments that could propel the stock further. Given the global context of water conservation, VA Tech Wabag’s role in providing sustainable solutions is more crucial than ever, suggesting a bright future despite short-term market fluctuations.
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