Synopsis:
Va Tech Wabag is in focus as Motilal Oswal expects its stock to rise by approximately 70 percent in its Bull Case Scenario due to its robust order book, strong executional capacity, and focus on high-margin products.
With a market capitalisation of Rs 9,851 crores, the shares of Va Tech Wabag Ltd are currently trading at Rs 1,583 per share, down by 18.57 percent from its 52-week high of Rs 1,943.95 per share. Over the past five years, the stock has delivered multibagger returns of 1,047 percent.
Motial Oswal has set a price target of Rs 1,900 per share on the stock, signalling an upside of 25 percent from its previous day closing price of Rs 1,517.80 per share.
However, there is a twist in the rationale. Motilal Oswal believes that this stock has extra capabilities, because of which it has set a ‘Bull case’ for the stock to outperform with a target price of Rs 2,564 per share, signalling an upside of 69 percent from its previous day closing price of Rs 1,517.80 per share.
In this scenario, the brokerage anticipates the company’s revenue, EBITDA, and net profit to grow at a CAGR of 22 percent, 28 percent, and 30 percent respectively.
The brokerage is confident about VA Tech Wabag’s growth prospects, backed by a solid order book, improving margins, better return ratios, and a healthy generation of free cash flow (FCF), which makes the company quite cash-rich. Any significant order wins or notable margin improvements could trigger a re-evaluation of its valuation in the medium term.
Additionally, VA Tech Wabag operates on an asset-light business model, emphasising engineering, procurement (EP), and operations & maintenance (O&M) services. With R&D centres in both India and Europe, the company holds over 125 intellectual property rights.
Even though it is well-equipped to manage large, complex projects on a global scale, the company remains selective in its bidding process, prioritising profitability and cash flows. According to Motilal Oswal, it maintains a win ratio of 25–30 percent.
For a more conservative outlook, Motilal Oswal expects VA Tech Wabag’s revenue, EBITDA, and net profit to grow at a CAGR of 17 percent, 22 percent, and 23 percent, respectively, over FY25 to FY28.
Currently, the company has an order book worth Rs 13,700 crore, which is 4.2 times its FY25 revenue. Additionally, it has a strong bid pipeline valued at Rs 20,000 crore, providing a clear visibility of 15–20 percent revenue growth over the next 3-4 years.
VA Tech Wabag is concentrating on large-scale projects in high-margin sectors, which should further bolster its profitability. Motilal Oswal expects the company to generate average free cash flows of Rs 350 crore each year during FY25–28, because of its robust operations and improvements in its working capital cycle.
In the coming three years, the brokerage anticipates that VA Tech Wabag’s return ratios will show consistent improvement. They expect ROCE to climb from 20 percent to 24 percent, ROE to increase from 14 percent to 16 percent, and ROIC to rise from 28 percent to 29 percent.
Financial Highlights
The company reported a revenue of Rs 3,294 crore in FY25, up by 15.33 percent from its FY24 revenue of Rs 2,856 crore. Additionally, it reported a net profit growth of 18 percent to Rs 295 crore in FY25 from Rs 250 crore in FY24.
The stock has delivered an ROE and ROCE of 14.89 percent and 20.05 percent respectively, and is currently trading at a P/E of 33.38x as compared to its industry average of 29.79x.
VA Tech Wabag is a leading water technology company that specialises in designing, building, and operating facilities for drinking water, sewage, industrial wastewater, and desalination, both in India and internationally.
They offer a range of services, including engineering, procurement, construction (EPC), and operation and maintenance (O&M) across municipal and industrial sectors. Their expertise spans various industries such as oil and gas, power, steel, fertilisers, and food and beverage.
Written by Satyajeet Mukherjee
Disclaimer

The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
The post Water management stock to buy now for an upside of 70%; Recommended by Motilal Oswal appeared first on Trade Brains.