Top Conviction Ideas : Buy VA Tech Wabag Ltd For Target Rs. 1,920 by Axis Securities Ltd
* Strong Revenue Growth Indicating Execution Abilities: Wabag reported a 17% YoY revenue growth while maintaining EBITDA margins at around 13%. This performance, following a strong previous quarter, underscores the company’s ability to effectively convert its order book into tangible revenue growth.
* Order Wins Support Future Growth Plans: The company recorded order inflows of ~Rs 2,600 Cr during the quarter, closing with a robust and well-diversified order book of around Rs 15,800 Cr (including framework agreements), representing more than four times its annual revenue. This includes the Yanbu 300 MLD Desalination Project in Saudi Arabia, which was previously cancelled, and the BWSSB DBO Project in Bengaluru.
* Maintains Medium-Term Growth Outlook: The company is well-positioned to capitalise on the increasing focus on water infrastructure in both domestic and key international markets. It has reiterated its medium-term guidance of delivering 15–20% revenue CAGR, supported by targeted EBITDA margins in the 13–15% range
* Valuation & Recommendation: We believe the order book remains healthy and have a positive long-term view on the stock. Accordingly, we continue to value the stock at 21x FY27E with a target price of Rs 1,920/share, recommending a BUY rating on the stock.
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SEBI Registration number is INZ000161633
