Motilal Oswal keeps Buy rating on VA Tech Wabag, sees 30% upside

what happened

VA Tech Wabag Ltd. shares could gain as much as 30%, brokerage Motilal Oswal said in a note issued on Monday, October 12. The firm maintained its “buy” rating and set a target of ₹2,529 per share. It said recurring order awards and normal project execution should support sustained growth, including in the war-affected West Asia region.

The company’s order book stands at ₹20,000 crore, equivalent to five times its FY26 revenue. Together with a strong bidding pipeline, this gives visibility for 20% revenue growth over the next three to four years, Motilal Oswal said. VA Tech Wabag continues to prioritize profitable expansion and overseas markets. Following FY21-26 CAGRs of 7% for revenue, 17% for EBITDA and 28% for adjusted profit after tax (APAT), the brokerage expects CAGRs of 19%, 26% and 23%, respectively, in FY26-28.

Motilal Oswal also pointed to robust free-cash-flow generation, a ₹1,000 crore net-cash position and improving return ratios. It valued the stock at 21 times estimated FY28 earnings. During the past six months, VA Tech Wabag won contracts in India and abroad, including a ₹250 crore repeat order from Reliance Industries in Jamnagar and projects worth ₹100 crore in Kuwait and ₹600 crore in the UAE. Overseas business accounts for 50% of revenue and a larger share of the order book. On Thursday, the stock, after rising as much as 6% to ₹2,007.5 in early trade, was up 1.2% at ₹1,960. It has gained 50% this year but remained 15% below its September 15 record of ₹2,319.

why it matters

The sizeable backlog and growing international exposure underpin the brokerage’s growth estimates, while the share-price performance shows how the market is weighing those expectations.

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