VA Tech Wabag has received a maintained Buy rating from Motilal Oswal Financial Services with a target price of ₹1,900, reflecting strong confidence in the company's growth trajectory and robust order book position. The brokerage's positive outlook is anchored on substantial order inflows and strong financial fundamentals that position the company for sustained growth.

Strong Order Book and Recent Contract Wins

The company has demonstrated impressive order acquisition capabilities with a current order book valued at ₹163bn, representing approximately 5 times FY25 revenue. This substantial backlog provides strong revenue visibility and supports the brokerage's growth projections.

A notable recent achievement includes securing a ₹10bn Chennai TTRO refurbishment contract, which adds to the company's growing portfolio of infrastructure projects.

Growth Projections and Financial Outlook

Motilal Oswal expects VA Tech Wabag to deliver robust growth across key financial metrics during the FY25-28 period. The brokerage projects sustained revenue growth of 15-20%, supported by the strong order book and pipeline opportunities.

Strong Financial Position

The company maintains a robust balance sheet with net cash position of ₹8.9bn, providing financial flexibility for growth initiatives and working capital requirements. Additionally, the brokerage highlights improving return ratios and strong free cash flow generation, indicating efficient capital utilization and operational excellence.

The combination of substantial order visibility, strong financial position, and improving operational metrics supports Motilal Oswal's positive stance on VA Tech Wabag's prospects in the infrastructure and water treatment sector.

VA Tech WABAG has secured a significant contract from the Chennai Metropolitan Water Supply and Sewerage Board for a major water treatment facility in Chennai. The Letter of Award covers the refurbishment, finance, operate, maintain and transfer of a 45 Million Litres per Day Tertiary Treatment Reverse Osmosis plant at Kodungaiyur, to be executed under Public-Private Partnership mode.

Project Details and Scope

The TTRO plant at Kodungaiyur was originally developed by CMWSSB in 2019 to supply high-quality treated wastewater to industries in the Manali–Ennore and Manali–Minjur industrial corridors in Chennai. Under the new contract, WABAG will undertake comprehensive refurbishment and upgradation of the existing facility to restore its full treatment capacity.

Strategic Significance

This contract reinforces WABAG's position in advanced water recycling and reuse solutions. The company is already operating the 45 MLD TTRO facility at Koyambedu, Chennai, which was designed, built, and commissioned by WABAG in 2019 to supply high-quality recycled water to industrial consumers. Additionally, WABAG operates a 40 MLD TTRO facility in Ghaziabad under PPP mode, supplying treated water to multiple industries in the Sahibabad Industrial Area.

Management Commentary

S Varadarajan, Whole Time Director & Chief Growth Officer, commented on the development: "We are delighted to secure this prestigious Recycle & Reuse project from our valued client, CMWSSB. We thank them for their continued trust and confidence in our technological expertise and execution capabilities. This project further strengthens our leadership in the Indian water sector and reinforces our position at the forefront of water recycling and reuse."

Order Classification Framework

WABAG categorizes its orders based on value thresholds:

Contract Terms and Conditions

The project involves refurbishment, finance, operate, maintain and transfer arrangements under Public-Private Partnership mode. WABAG will ensure reliable supply of treated water meeting stipulated quantity and quality standards throughout the operational period. The contract supports sustainable industrial water management and Chennai's transition towards a circular water economy.

This mega order award demonstrates CMWSSB's continued confidence in WABAG's technological expertise and execution capabilities in the water treatment sector. The project aligns with sustainable water management practices and industrial water reuse initiatives in the Chennai metropolitan area.