logo
Motilal Oswal sees 70% rally in this multibagger stock amid expanding order book. Should you buy?

Motilal Oswal sees 70% rally in this multibagger stock amid expanding order book. Should you buy?

Mint4 days ago
Motilal Oswal has initiated coverage on VA Tech Wabag with a 'buy' rating, citing the company's expanding order book, improving margins and return ratios, and strong free cash flow generation.
VA Tech Wabag is a leading, 100-year-old water technology company that offers end-to-end solutions in the design, construction, and operation of wastewater projects. The company has been consistently expanding its order book in recent years, driven by the growing global focus on water and waste management, a sector that involves removing contaminants from sewage or wastewater to make it recyclable, reusable, and environmentally safe.
The sector is gaining momentum due to increasing environmental regulations, rising water pollution, growing water scarcity, and industrial demand for wastewater treatment. It is projected to grow from USD 329 billion in 2023 to USD 576 billion by 2032.
Backed by industry tailwinds and its strong execution capabilities, VA Tech Wabag has built a robust order pipeline that underpins its future growth prospects. Motilal Oswal highlighted that VA Tech Wabag's current order book stands at ₹ 137 billion, 4.2 times its FY25 revenue, supported by a strong bid pipeline of ₹ 150–200 billion.
This provides visibility for 15–20% revenue growth over the next 3–4 years. The order book includes a healthy mix of O&M projects (39%, with execution cycles ranging from 5 to 20 years) and EPC projects (52%, with 2–3-year cycles).
Despite being eligible to execute large critical projects globally, it is selective in bidding (focus is on margins and cash flows) and has a win ratio of 25-30%.
The brokerage also underscored the company's impressive turnaround in free cash flow over the past five years. VA Tech Wabag moved from a net debt position of ₹ 4 billion in FY19 to a net cash balance of ₹ 5.9 billion at the end of FY25.
Motilal expects the company to continue generating strong free cash flows ( ₹ 3.5 billion annually during FY25–28E), driven by healthy operating performance and improvements in the working capital cycle.
Return ratios have significantly improved as well. RoCE and RoIC have doubled to 20% and 28% in FY25 from 11% and 12% in FY19, respectively. RoE has risen to 13.8% in FY25, compared to 8–9% reported until FY22. For FY25–28E, the brokerage projects further improvements, with RoCE rising from 20% to 24%, RoE from 14% to 16%, and RoIC from 28% to 39%, which is all above the company's guided range.
Motilal Oswal, in its bull case scenario, expects VA Tech Wabag's stock to reach ₹ 2,564 apiece, a potential upside of 70% from its recent closing price. Under the base case scenario, Motilal Oswal has set a target price of ₹ 1,900, implying a 25% upside from Monday's closing level.
In the bear case scenario, Motilal Oswal sees the stock falling to ₹ 1,318, expecting 12%, 14% and 15% CAGR in revenue, EBITDA, and PAT over the same period.
According to Trendlyne's shareholding data, late investor Rakesh Jhunjhunwala's wife, Rekha Jhunjhunwala, held an 8.04% stake at the end of the June 2025 quarter.
The company's shares, following their one-way rally, have witnessed profit booking, resulting in three consecutive months of declines. However, the momentum reversed in March, with the stock gaining 27.6% so far.
Looking further back, the stock has delivered stellar returns in the long run, currently up 1143% over the last five years. In December, the stock recorded a fresh all-time high of ₹ 1,944, edging toward the ₹ 2,000 mark.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Friendship always first: PM resets India-Maldives ties with defence, trade push
Friendship always first: PM resets India-Maldives ties with defence, trade push

India Today

time39 minutes ago

  • India Today

Friendship always first: PM resets India-Maldives ties with defence, trade push

Prime Minister Narendra Modi on his two-day visit to the Maldives reaffirmed the historic and strategic depth of the bilateral relationship. 'The roots of our relations are older than history, and as deep as the ocean,' Modi said during his two-day visit to Modi held wide-ranging talks with Maldivian President Mohamed Muizzu to strengthen cooperation in key sectors including trade, defence, and maritime security. 'For us, it is always friendship first,' the Prime Minister declared, calling India the 'most trusted' friend of the Indian Ocean meeting marked a turnaround in bilateral ties, which had witnessed tensions after Muizzu came to power in November 2023 following his 'India Out' campaign. Modi, however, asserted that the India-Maldives friendship will always 'remain bright and clear' regardless of circumstances. India on Friday announced a Rs4,850 crore (USD 565 million) line of credit to the Maldives. 'This amount will be used for projects related to the development of infrastructure in the Maldives, in accordance with the priorities of the people of the country', the PM Secretary Vikram Misri said the pact signed during the visit would reduce the Maldives' annual debt repayment to India by 40 per cent. While China's growing assertiveness was not directly mentioned, Misri said India continues to work with the Maldives on issues that may 'impinge not just our security but the common security of the region.'PM Modi confirmed that both sides will soon finalise a bilateral investment treaty and that negotiations for a free trade agreement have already the visit,PM Modi and Muizzu jointly inaugurated several India-backed projects, including a new defence ministry building in Male, roads and drainage systems in Addu city, and 3,300 housing units in Hulhumale. PM Modi also handed over 72 vehicles and equipment to the Maldives National Defence the new defence ministry complex as a 'concrete building of trust,' PM Modi said it stands as a symbol of the 'strong partnership' between the two nations. 'India will continue to support the Maldives in the development of its defence capabilities. Peace, stability and prosperity in the Indian Ocean region is our common goal,' he the Maldives' role in India's strategic outreach, PM Modi said, 'The Maldives holds an important place in both India's Neighbourhood First policy and its MAHASAGAR (Mutual and Holistic Advancement for Security and Growth Across Regions) vision.'PM Modi also spotlighted India's swift and consistent support to the Maldives during times of crisis. 'India is also proud to be the most trusted friend of the Maldives. Be it a disaster or a pandemic, India has always stood by as a 'first responder',' he welcomed the progress made under the economic and maritime security vision unveiled during Muizzu's visit to New Delhi in October last year. 'Now it is becoming a reality. And as a result of that, our relations are touching new heights,' PM Prime Minister also noted the growing success of India's UPI (Unified Payments Interface) system in the Maldives. 'The speed with which UPI is being promoted in the Maldives will give a boost to both tourism and retail,' he Modi arrived in Male from London in the second and final leg of his two-nation tour. He received a warm welcome at Velena International Airport, with President Muizzu and top Maldivian ministers personally receiving him. Later, he was accorded a ceremonial welcome and a guard of honour at the Republic Square.- EndsMust Watch

India, UK firms upbeat on FTA to double trade to $112 bn by 2030: Goyal
India, UK firms upbeat on FTA to double trade to $112 bn by 2030: Goyal

Business Standard

time2 hours ago

  • Business Standard

India, UK firms upbeat on FTA to double trade to $112 bn by 2030: Goyal

Commerce and Industry Minister Piyush Goyal has said that businesses in Britain as well as India are optimistic about the free trade agreement which aims to double the bilateral trade to USD 112 billion by 2030. The India-UK free trade agreement, also called Comprehensive Economic and Trade Agreement (CETA), was signed by Goyal and his counterpart Jonathan Reynolds in presence of Prime Minister Narendra Modi and British Prime Minister Keir Starmer on Thursday. In a post-signing interaction with business leaders from across sectors, Goyal said," Investors are looking to double down on their investments. People in industry and manufacturing are looking to expand markets. The services sector is excited about the growth potential. Everybody, whether from government or from the private sector, has a shared commitment to double the trade between the two countries by 2030." Anuj Chande, Partner at Grant Thornton UK and Head of its South Asia Business Group said," It (the deal) certainly comes across as a win-win for both countries with a huge reduction in tariffs is the beginning of the journey and not the end. Kishore Jayaraman, India Chair of the UK India Business Council (UKIBC), which facilitates trade between both countries, said the tariffs have been brought down to acceptable levels for both nations, so that the trade and economy can grow without any bottlenecks. "But beyond that, it is a recognition that there are so many sectors, digital, tech, defence, life sciences, agriculture, where there are products and services that both nations have that can be brought to the people of both these nations at a much faster pace," he added. (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

India's forex kitty drops by USD 1.183 bn to USD 695.489 bn
India's forex kitty drops by USD 1.183 bn to USD 695.489 bn

The Print

time3 hours ago

  • The Print

India's forex kitty drops by USD 1.183 bn to USD 695.489 bn

For the week ended July 18, foreign currency assets, a major component of the reserves, slipped by USD 1.201 billion to USD 587.609 billion, the data released on Friday showed. In the previous reporting week, the overall kitty had dropped by USD 3.064 billion to USD 696.672 billion. The reserves had touched an all-time high of USD 704.885 billion in end-September 2024. Mumbai, Jul 25 (PTI) India's forex kitty declined by USD 1.183 billion to USD 695.489 billion during the week ended July 18, the RBI said on Friday. Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves. However, the gold reserves increased by USD 150 million to USD 84.499 billion during the week, the RBI said. The Special Drawing Rights (SDRs) were down by USD 119 million to USD 18.683 billion, the apex bank said. India's reserve position with the IMF declined by USD 13 million to USD 4.698 billion in the reporting week, the apex bank data showed. PTI AA SHW This report is auto-generated from PTI news service. ThePrint holds no responsibility for its content.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store