Va Tech Wabag Ltd. share price target

Q4FY21 revenue grew by 27% YoY aided by strong execution in domestic (37% YoY) and international operations (29% YoY). Despite higher RM costs, EBITDA margin improved by 118bps YoY to 7.8% due to lower employee cost & other expenses. Order book remain strong at Rs.9,584cr (3.4x FY21 revenue) led by 17% increase in order intake in Q4FY21. Management refrained from providing order inflow and revenue guidance for FY22 due to pandemic situation. Debt level has shown significant reduction to Rs.305Cr against...

Background: VA Tech Wabag is a leading MNC in the water treatment space. The company has vast experience in plant building, planning, execution and operation of drinking water plants and waste water plants for both municipal and industrial sectors. The company has a multinational pedigree and offers customer specific solutions. The company has about 100+ patents which include both products and process patents and Wabag Austria has 51 patents that are awaiting...

Company registered better than expected revenue of Rs.796Cr registering a growth of 17.2%YoY and 30.8% QoQ. We expect revenue to grow at a CAGR of 11.7% over FY20-23. Increased government focus on water recycling and higher budgetary spend will boost the order intake going forward. Debt level has shown significant reduction and stands at Rs.383Cr against Rs.482Cr in FY20 and Rs.392Cr in Q2FY21. We expect further decline in debt level due to improved revenue generation. Considering the positive outlook of the water treatment industry and expected revenue rebound along with improving cash position, we value the stock at 1 year forward PE of 10.5x its FY23E earnings...

Background: VA Tech Wabag is a leading MNC in the water treatment space. The company has vast experience in plant building, planning, execution and operation of drinking water plants and waste water plants for both municipal and industrial sectors. The company has a multinational pedigree and offers customer specific solutions. The company has about 100+ patents which include both products and process patents and Wabag Austria has 51 patents that are awaiting...

Current order backlog at Rs.11,045cr (3.8x last 3-year average annual revenue) provides strong visibility for the next 4 years. However, a higher mix of municipal orders (85%) adds concerns on receivables. The debt level has gone up due to working capital issues. A slight recovery is seen in recent quarters. Even though an improvement is seen in revenue generation during H2FY20, company is expected to generate lower revenue in H1FY21 due to lockdown and other restrictions....

In our midcap universe of 11 companies, we expect Tata Chemical, VA Tech Wabag, Emmbi Industries and Kanpur Plastipack to be the most impacted stocks given that all these have revenue contribution in excess of 30-35% from the said geographies. We have envisaged the impact of Coronavirus (Covid-19) on our midcap coverage universe based on the revenue contribution from both the US as...

The order backlog of the company remains at | 10,826 crore excluding framework contracts against TTM revenues of | 2451 crore, representing TTM book-bill of 4.4x. The management believes the company would achieve its annual revenue guidance of | 3000 crore (9M revenues of | 1772 crore) but we expect the company to be able to execute contracts worth | 800-900 crore in the last quarter given that old receivables are already stuck at present and any large growth could distort balance sheet, going ahead. Further, delay in proceeds from old receivables such as TSGENCO, Tecpro...

Background: VA Tech Wabag is a leading MNC in the water treatment space. The company has vast experience in plant building, planning, execution and operation of drinking water plants and waste water plants for both municipal and industrial sectors. The company has a multinational pedigree and offers customer specific solutions. The company has about 100+ patents which include both products and process patents and Wabag Austria has 51 patents that are awaiting...

Sector: Engineering & Capital goods /Mid Cap | Earnings Update 2QFY20 Background: VA Tech Wabag is a leading MNC in the water treatment space. The company has vast experience in plant building, planning, execution and operation of drinking and waste water plants for both municipal and industrial sectors. The company has a multinational pedigree and offers customer specific solutions. The company has about 100+ patents which include both products and process patents and Wabag Austria has 51 patents that are awaiting approval. As part of organizational...