Wastewater management stock to buy now for an upside of more than 50%.

Stocks engaged in the design, construction, operation, and maintenance of water treatment and desalination plants for municipal and industrial clients. The stock has an upside potential of 52.72 percent from its high, and ICICI Direct has given a buy.

VA Tech Wabag Limited was founded in 1924 and is a 100-year-old multinational company based in Chennai, India. The company is a global leader in water and wastewater treatment solutions. The company specializes in designing, supplying, installing, and managing plants for drinking water, wastewater treatment, and industrial water treatment. 

With a presence across four continents, the company has executed over 6,500 projects and holds more than 125 intellectual property rights, showcasing its dedication to innovation.

VA Tech Wabag’s operational and financial performance is expected to improve significantly, with estimated revenue, EBITDA, and PAT growth at 7.4%, 21.9%, and 24.9% CAGR from FY24-27E. With a focus on return ratios and an asset-light model, the company is valued at Rs. 2,308, or 30x FY27E EPS. 

Order Book 

VA Tech Wabag has seen a strong order inflow of over Rs. 4,600 crores in H1 FY25, with 57% from international clients and 31% from the industrial sector. The company’s order book stands at over Rs. 14,500 crore, and it anticipates reaching Rs. 16,000 crore by the end of FY25, driven largely by international markets. 

The company has already secured preferred bidder status in projects worth Rs. 3,500 crores, expected to convert soon. The company is on track to surpass its FY25 order intake guidance, aiming for Rs. 8,000 crores in total inflows, with a continued focus on E&P projects and international growth.

Projects 

VA Tech Wabag’s key projects include the 400 MLD Perur desalination plant in Chennai, progressing well with peak engineering and civil works, and the 200 MLD sewage treatment plant in Pagla, Bangladesh, which has resumed after a two-month disruption. 

Additionally, the Kolkata HAM project has successfully achieved its Commercial Operation Date (COD), marking a significant milestone in the company’s project portfolio.

Target Price

ICICI Direct has maintained a buy rating on the VA Tech Wabag Limited and given a target price of Rs. 2,308, which has an upside potential of 52.72 percent from the closing price of Rs. 1511.30.