Buy WPIL Ltd for the Target Rs 650 by Emkay Global Financial Services Ltd
We assume coverage on WPIL, maintaining BUY and TP of Rs650 (implying ~44% upside). WPIL’s 1QFY27 performance was ahead of our expectations – consolidated revenue/EBITDA came in at Rs5bn/Rs753mn, growing 32%/53% yoy, respectively. EBITDA margin improved by 205bps yoy at 15%. Both divisions saw robust revenue growth: Products at +16.8% yoy and Projects at +50.6% yoy. EBIT margin for Products vertical expanded significantly at 31.4% due to change in mix skewed toward higher-margin after-sales service; however, margin for the Projects division declined to 7.3%, mainly due to slower execution in the domestic projects division (JJM). Order backlog at end1QFY27 stands at Rs52.7bn, which provides multi-year revenue visibility
Products division - Superior margin and strong growth
The Products division reported revenue of Rs2.4bn in 1QFY27, registering a healthy 16.8% yoy growth. The performance was driven by robust demand across geographies, with international revenue growing 20% yoy and domestic revenue increasing 10% yoy. EBIT margin expanded significantly to 31.4% during the quarter compared to 19.4% in 1QFY26, primarily driven by a favourable revenue mix skewed toward the higher-margin after-sales service business. Management, however, indicated that sustainable margins for the division are likely to normalize in the range of 22–25% over the medium term. Products division's order backlog stood at Rs10.3bn at end-1QFY27, providing strong revenue visibility for coming quarters. International orders accounted for ~55% of the total backlog, underscoring the division’s increasing global presence and demand traction across overseas markets.
Projects division - International business strong; domestic affected by JJM
The Projects division reported revenue of Rs2.6bn in 1QFY27, registering strong growth of 50.6% yoy. The performance was primarily driven by the international business, where revenue surged 283% yoy to Rs2.2bn. In contrast, domestic revenue declined 63% yoy to Rs434mn, largely due to slower execution of Jal Jeevan Mission (JJM) projects. EBIT margin for the quarter moderated to 7.3% compared with 12.9% in 1QFY26, reflecting lower contribution from the domestic business. Projects division's order backlog stood at Rs42.4bn at end-1QFY27, granting healthy medium-term revenue visibility. International projects accounted for ~55% of the total backlog, while the domestic order book of Rs19.2bn comprised Rs5.2bn of O&M contracts and Rs14bn of JJM-related EPC projects.
View and valuations - Maintain BUY
With a strong order book of Rs52.7bn and pick-up in execution in the international projects division, we expect ~29%/41% revenue/PAT CAGR, respectively, over FY26-28E for WPIL. The stock is currently trading at an attractive valuation of 18x/14x PER for FY27E/28E. We maintain BUY on the stock and roll forward our TP to Jun-28E, while maintaining it at Rs650, implying 19x PER
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