Buy WPIL Ltd for the Target Rs.650 by Emkay Global Financial Services Ltd
We maintain BUY on WPIL, with unchanged TP of Rs650 (implying ~40% upside). Our constructive view on WPIL is underpinned by factors such as the company 1) being a globally well-diversified player, with presence across the value chain in the pump sector; 2) having a strong order book of Rs49bn (+47% YoY), which we believe will lead to a stronger revenue CAGR of 29% over FY26- 28E with pick-up in execution; and 3) likely seeing EBITDA/EPS CAGR of ~32%/41% over FY26-28E, on the back of better revenue mix and increasing high-margin aftermarket + O&M revenue. We expect structural demand tailwinds across water infrastructure, desalination, and wastewater treatment to be key growth drivers for WPIL, going forward.
Q4FY26 result summary
WPIL’s consolidated revenue/EBITDA came in at Rs5bn/Rs762mn, broadly in line with our estimates. The decline in revenue was mainly due to execution challenges in the domestic project business, largely related to JJM projects that we believe would see revival going ahead on account of JJM2. EBITDA margin improved by 90bps YoY to 14.9%. Q4FY26 PAT at Rs404mn looks lower YoY, albeit due to the tax-related adjustment on account of the Rutschi exit transaction in Q4FY25.
Growth momentum strong in international geographies
International revenue increased 73% YoY to Rs12bn in FY26, increasing its share in the total revenue to 62% in FY26 (from 38% in FY25). This increase is mainly attributable to its recent acquisition of a project-based company in South Africa (PCI Africa). The international order book at the end of FY26 stood at ~Rs26bn (+286% YoY). Margin profile of the international geography is better vs domestic. Over the next 2 years, we expect 34% CAGR in international revenue. With a robust installed base of the acquired businesses, we see the aftermarket and O&M businesses supporting strong EBITDA growth (35% CAGR over FY26-28E).
Aftermarket sales and O&M provide margin-improvement levers
Aftermarket sales account for 30-35% of WPIL’s product business. With pick up in the project business, the management expects O&M revenue to start kicking in soon. The current backlog includes Rs5bn from O&M. We see both businesses as sticky and marginaccretive in nature, and is likely to witness growth in line with the growing installed base, giving further fillip to profitability.
View and valuations – Maintain BUY
With a strong order book and pick up in execution, we expect ~29%/41% revenue/PAT CAGR, respectively, over FY26-28E for WPIL. The company’s return ratios remain healthy, with RoE/RoCE of 14.2%/15.9%, respectively, in FY26. The stock is currently trading at an attractive valuation of 19x/14x P/E for FY27E/28E. We recommend BUY on the stock with TP of Rs650, at 20x FY28E EPS (5-year average: 15x).
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