Va Tech Wabag is one of the world’s leading companies in the water treatment field. Its principal activities include design, supply, installation, construction and operational management of drinking water, waste water treatment, industrial water treatment and desalination plants. The company offers complete life cycle solutions including conceptualization, design, engineering, procurement, supply, installation, construction and O&M services along with a range of EPC and O&M solutions for sewage treatment, processed and drinking water treatment, effluents treatment, sludge treatment, desalination and reuse for institutional clients like municipal corporations and companies in the various sectors such as Oil and Gas, Power, Steel, Fertilizer, Food and Beverage, Water Reclamation and many new and emerging sectors.

Clientele:

Figure 1 Company's Clientele (source: company presentation)

Over the last 9 decades, WABAG has successfully executed over 6500 plants across segments which cater to over 88 million people globally. It is Ranked 3rd Globally by GWI for ensuring water & sanitation for over 88 Mn people and Ranked among Top 5 Global Desalination players by GWI. Company has filed 125+ IP Rights which are developed in-house for water treatment technology solutions at Global R&D centres – in Europe and India. It has very good international presence in India, South East Asia, Middle East, Africa, Europe and Latin America with companies and offices in 25+ countries.

In last 2.5 decades, company has supplied 1.3 million m3 of Desalinated Water per day, 2.7 million m3 of Recycled Water per day and 27.5 million m3 Clean Water per day. Company has generated 41MW of Green Energy per day and treats 27 million m3 waste water per day.

Notably the company has been committed in managing over 195 crore liters of water each day under Namami Gange project and its contribution has been constantly increasing in this project of GOI. So far, the company has completed projects in Haridwar, Kondli, Keshopur, Pappankalan and Varanasi and its ongoing projects includes Rithala, Kanpur, Digha, Kankarbagh, Pahari, Kamalichak and Kolkata.

Company’s order intake as of 9MFy24 stood at Rs. 17616 million out of which 69% order are from Industrial sector and 31% came from various municipalities. Its O&M business contributed 80% of its total orders intake and rest 20% came from EPC business. It received 59% orders from India and 41% orders from Rest of the World.

Company’s outstanding order book position stands at Rs. 118655 million as of 9MFy24 consisting of 68% of Overseas orders and 32% of domestic orders. 87% of the total orders bagged by the company are from industrial sector and 13% is from municipalities with 57% of total orders from O&M business and 43% from EPC business.  

Fundamentals :

Financial Results:

Company’s Net Sales was at Rs 704.40 crore in December 2023 up by 8.11% from Rs. 651.56 crore in December 2022. Its Quarterly Net Profit was at Rs. 62.90 crore in December 2023 up by 33.43% from Rs. 47.14 crore in December 2022. Company’s EBITDA stands at Rs. 102.60 crore in December 2023 up by 33.44% from Rs. 76.89 crore in December 2022.

Figure 2 Revenue Break up for 9MFY24

Key Updates:

1. The Hon’ble Minister of Youth Welfare and Sports Development of Tamil Nadu, Thiru Udhayanidhi Stalin, together with the Hon’ble Minister for Municipal Administration, Urban & Water Supply, Thiru K N Nehru, inaugurated the 178.3 MLD Water Treatment Plant (WTP) in Coimbatore which as was Designed, Built and Commissioned by VA TECH WABAG LIMITED (WABAG) for Tamil Nadu Water Supply and Drainage Board (TWAD), under the prestigious Atal Mission for Rejuvenation and Urban Transformation (AMRUT) Scheme.
2. The Hon’ble Chief Minister of West Bengal, Ms. Mamata Banerjee, recently inaugurated the Drinking Water Treatment Plant in Uttarpara, Hooghly, West Bengal, with a capacity of 55 MGD, which has been Designed, Built and Commissioned for Kolkata Metropolitan Development Authority (KMDA) by VA TECH WABAG LIMITED (WABAG).  This project is a pure-play water technology by the company which will cater to 20 lakh people in the Uttarpara Municipality.
3. The company has recently partnered with Pani Energy Inc. to implement applied AI to its operational excellence. The new category of digital technology is called Operational Intelligence (OI) and is delivered through Pani ZEDTM. This tool aims to optimize OPEX in the plants by reducing downtime, energy consumption, and chemical usage. Additionally, it will expedite crucial decision-making processes and enhance the longevity of critical equipment.
4. It has entered a Memorandum of Understanding (MoU) with Al Jomaih Energy and Water (AEW), a leading developer of energy and water projects in the Middle East. Under this strategic partnership, both WABAG and AEW will cooperate on various aspects, including Engineering, Procurement, and Construction (EPC), project development, and feasibility assessments for potential water projects.
5. Recently, Hon’ble Chief Minister of Tamil Nadu laid the foundation stone for the 400 MLD Perur SWRO Desalination Plant which is the largest one amongst South East Asia. The project marks a collaborative effort between the Chennai Metropolitan Water Supply and Sewerage Board (CMWSSB) and a joint venture led by VA TECH WABAG (WABAG) and Metito Overseas Limited (Metito) and Japan International Cooperation Agency (JICA).
6. Company has also secured an order worth about INR 420 Crores towards Design, Build and Operation (DBO) of a Water Treatment Plant (WTP) with a capacity of 270 million Litres per Day (MLD) at Jite, Raigad for City and Industrial Development Corporation of Maharashtra Limited (CIDCO). It has has been planned in order to cater to the future water demand for Navi Mumbai. Water from Hetwane dam will be treated at the proposed 270 MLD WTP and pumped to existing Master Balancing Reservoir (MBR) at Vihal location for further distribution.
7. The company recently signed an agreement with Asian Development Bank (‘ADB’) towards raising Rs. 200 crores through unlisted Non- Convertible Debentures (‘NCD’) carrying 5 years and 3-month tenor which will be subscribed by ADB over a 12-month period.
8. WABAG has also secured an Engineering and Procurement (‘EP’) order worth about 18 million Euros (about ₹ 149 Crore) from DL E&C CO., LTD., Korea, towards a Water treatment package for the EuroChem Methanol Production facility in Kingisepp, Russia.
9. The company has further enhanced its global position in the Desalination market, by securing a consortium Design, Build, Operate (‘DBO’) order, for the 50 MLD (expandable to 100 MLD) Mamelles Sea Water Desalination Project from Société Nationale Des Eaux du Sénégal (‘SONES’), the National Water Company of Senegal, worth about 146 million Euro.
10. WABAG through its wholly owned subsidiary M/s. Ghaziabad Water Solutions Private Limited (SPV) has signed a concession agreement with Ghaziabad Nagar Nigam (GNN) towards Design, Build, Finance and Operation of a new 40 MLD Tertiary Treatment Reverse Osmosis (TTRO) plant along with associated infrastructure under Hybrid Annuity Model (HAM). WABAG will be the technical partner of the project and will execute the Design-Build-Operate (DBO) contract with SPV worth Rs. 594 crores.
11. Company has also secured an order worth about USD 100 Million in UAR for engineering and procurement activities in relation to 120 million Gallons Per Day (MiGD) Hassyan Sea Water Reverse Osmosis (‘SWRO’) in the United Arab Emirates (‘UAE’) from Green EPC (a Utico FZC subsidiary).
12. It has also secured an order worth 11.45 million USD from Dialog E&C Sdn. Bhd., Malaysia for establishing a new Effluent Treatment Plant (‘ETP’) for Pengerang Integrated Complex in Johor, Malaysia. It will be constructed for PRPC Utilities and Facilities Sdn Bhd (‘PRPC UF’), a subsidiary of PETRONAS Refinery & Petrochemical Corporation (PRPC).
13. VA TECH WABAG has strengthened its market position in the Oil & Gas sector by securing a breakthrough Engineering and Procurement (‘EP’) order worth 165 million US Dollars (about ₹ 1,230 Crore) from Amur Gas Chemical Complex LLC., (‘AGCC’) in Russia. AGCC is a joint venture of SIBUR Holding Russia and China Petroleum & Chemical Corporation (‘Sinopec’), China and AGCC is set to become one of the world’s largest basic polymer production facilities.
14. Company has also signed an agreement for with National Mission for Clean Ganga (NMCG) and Bihar Urban Infrastructure Development Corporation Ltd. (BUIDCO) worth INR 1,187 Crore under the prestigious Namami Gange Programme. The scope of the project includes development of Sewage Treatment Plants (‘STP’) of 150 MLD capacity along with sewerage network of over 450 km in the Digha and Kankarbagh zones of Patna, one of the most populous cities on the banks of River Ganga. This scope comprises Design, Build and Operate (‘DBO’) for a value of INR 940 Crore and Hybrid Annuity worth around INR 247 Crore, totaling to INR 1187 Crore.
15. It was also awarded and order worth 4.5 million Bahraini Dinar (approx. 900 million INR) from Ministry of Works, Municipalities Affairs and Urban Planning (‘MoW’) in Kingdom of Bahrain for Operation, Maintenance and Management of the Madinat Salman Sewage Treatment Plant (‘STP’) and Long Sea Outfall for a period of 5 years.
16. WABAG has signed a contract worth Rs. 278 crores with Bihar Urban Infrastructure Development Corporation Ltd (BUIDCo) for improvement of Water Supply System in Bhagalpur Municipal Corporation, Bihar, India.

In last 3 Years the stock gave a return of 270.56% as compared to the rise of Sensex and Nifty in the same period.

The Indian Government’s increasing focus on providing quality water to every household, high demand for water from population explosion and various industries, and stringent regulations on effluent treatment are projected to propel the expansion of India water and wastewater treatment market during the forecast period between 2023 and 2029 and the size of India water and wastewater treatment market is projected to grow at a CAGR of 10.05% reaching a value of USD 3.03 billion by 2029. Also, the implementation of stringent government rules, such as the zero liquid discharge regulation, for the treatment of sewage prior to release into bodies of water is likely to drive demand for wastewater treatment plants through 2025 and Va Tech Wabag being the leader in this industry is going to benefit a lot in upcoming years. Considering, company’s market leading position, outstanding order book positions, years of experience in water treatment and related solutions, future benefits from various municipality and government projects under clean water missions, long term benefit from Namami Gange project, proven financial track record, competitive strength, good international presence and growth of water treatment industry in upcoming years, one can invest in this company for long term period with buy in dips strategy.

HET ZAVERI

info@smartinvestment.in

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