Va Tech Wabag Ltd. share price target

VA Tech (VAW) reported weak set of numbers which were lower than our estimates on revenue and profit front. EBITDA margin bore the brunt of lower revenues. On the positive side, order wins were strong in Q2FY19, thereby...

sales declined 15% YoY to INR7.5b (below our expectation of INR9.1b). Standalone sales grew 3% YoY to INR5.2b, while subsidiary sales declined 39% YoY to INR2.3b. Revenue decline was on account of multiple projects having reached near-completion stage, while new projects are yet to pick up meaningfully. EBITDA declined 40% YoY to INR498m, with margin of 6.6% (-270bp YoY) below our estimate of 9.2%. Margins declined on account of increase in provisioning for doubtful debts. Recurring profit of INR358m (-41% YoY) was below our estimate of INR393m. Forex gain of INR130m was booked during the quarter.

VA Tech Wabag (Wabag) reported weak Q2FY19 numbers as topline, EBITDA, PAT came in below our estimates. Revenues declined 15.2% YoY to | 752 crore. Lower-than-expected topline growth was due to muted execution in both domestic (fell 1.5% YoY) and overseas segment (fell 21.8%YoY). Overseas segment contributed ~65% whereas domestic segment contributed ~35% to the topline Absolute EBITDA declined 18.9% YoY to | 62.8 crore. EBIDTA margins came in at 8.4% vs. 8.7% YoY...

Namami Gange order wins, strong overseas outlook Under the Namami Gange action plan, Wabag has already won | 147 crore WWTP, | 253 crore sewage and related projects. With decisionmaking expected to improve over the next few months, Wabag is now expecting large orders integrated city management projects' summing up to | 5000 crore for cities of Kanpur, Allahabad, Patna and Kolkata. As these large projects are likely to follow the hybrid model, Wabag may also raise up to | 400 crore for meeting equity contribution criteria. All such projects are likely to be centrally funded to tune of 40%. The rest 60% is...

Background: VA Tech Wabag is a leading company 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 157 patents which include both products and process patents and Wabag...

ease, going forward. The management is expecting significant receivables in the next two to four months. Collections are now directly receivable FY20E from GENCOs. As the projects are now in advanced stage of completion, 12.0 Wabag is expecting receivables of | 400-500 crore by September 2018. 13.6 Order inflows remain muted in Q4FY18, FY18, due to finalisation of large...

sales declined 8% YoY to INR10.4b, below our estimate of INR14.3b. Revenue was impacted by weak execution of projects domestically. Domestic sales were hurt by GST implementation. Standalone sales declined 24% YoY to INR5.3b, while subsidiary sales grew 18% YoY to INR5b. EBITDA fell 28% YoY to INR0.95b, with the margin of 9% (-260bp YoY) below our estimate of 11.2%. recurring profit of INR596m, too, was below our estimate of INR1.0b.

We note that the order placements for the Namami Gange has started to gain momentum - VA Tech Wabag (VAW) has recently announced some order wins. With the APGENCO plant achieving COD, we believe receivables from this project...

VA Tech Wabag Limited is a holding company engaged in water treatment field. The Company's principal activities include design, supply, installation, construction and operational management of drinking water, waste water treatment, industrial water treatment and desalination plants....