Stock Target: Water Management Stock with 30% Upside Potential

Synopsis:  After delivering a 58 percent compounded return in three years, this water treatment solutions stock now has a buy target of Rs 1,626, indicating nearly 30 percent upside potential from current market levels.

This small-cap water and wastewater treatment solutions stock has received a bullish outlook from a brokerage, driven by improving margins, strong order book visibility, and expanding international presence. The company’s strength, diversified exposure, and rising infrastructure demand are expected to support sustained revenue growth, profitability expansion, and earnings visibility ahead.

With a market cap of Rs 7,815 Cr, Va Tech Wabag Ltd is the company in the context where the stock is trading at Rs. 1,254 and has given a 58 percent compounded return in the last 3 years. 

The company is a global water technology company headquartered in Chennai, focused on designing, building, and operating water and wastewater treatment plants for municipal and industrial clients., and has lately received a buy rating from Geojit Financial Services with a target price of Rs 1,626 with an upside potential of upto 30 percent.

Brokerage View

Geojit Financial Services’s positive outlook on Va Tech Wabag Ltd is supported by improving margins, strong execution, expanding international presence, and robust order inflows, positioning the company well for sustained long-term growth visibility ahead.

The company reported strong operational performance driven by efficient execution and cost optimization. Gross margin improved by 227 basis points year-on-year to 25 percent, resulting in gross profit growth of more than 30 percent. Lower cost of sales played a key role in improving profitability and strengthening overall financial performance during the quarter.

VA Tech Wabag’s order book stood at about Rs 15,100crore, equivalent to about 4.1 times its trailing twelve-month revenue and almost 5x its FY25’s, this order book ensuring strong revenue visibility. This strong order backlog ensures stability and supports sustained growth across domestic and international municipal and industrial markets. Additionally, the company also has a healthy order pipeline of over Rs 3,000 crore, with several key prospects nearing finalization.

The company is expected to deliver strong financial growth over the next few years, with revenue projected to grow at an 18 percent CAGR between FY26 and FY28. EBITDA is forecast to grow faster at a 27 percent CAGR, supported by margin expansion, improved operational efficiency, and favorable business mix.

International projects contributed approximately 50 percent of YTD revenue, highlighting the company’s expanding global footprint. Overseas exposure is increasing steadily, improving diversification and reducing reliance on domestic markets. The growing presence in international markets enhances long-term opportunities and strengthens the company’s ability to secure large infrastructure and water treatment projects.

The Middle East remains a key growth driver due to significant investments in desalination, wastewater treatment, and water reuse infrastructure. Increasing regional demand for water solutions provides major opportunities. These projects are supported by large-scale infrastructure investments that have been creating favorable conditions for sustained order inflows and business expansion.

The company also sees strong future opportunities from emerging sectors such as solar manufacturing, hydrogen projects, Bio-CNG, and data centers, which require advanced water treatment solutions. 

Ace Investor Holding

As of Q2FY26, Rekha Jhunjhunwala holds more than 8 percent stake in the company. According to the available sources, the ace investor has held the same percent of stake since Q3FY21.

Business & Financial Overview
VA Tech Wabag Ltd is a Chennai-based multinational water technology company specializing in water and wastewater treatment solutions. It designs, builds, and operates desalination, drinking water, and sewage treatment plants for municipal and industrial clients, serving over 88 million people globally with sustainable water management solutions.

In the latest quarter the company saw a YoY revenue growth of 18 percent, going from Rs 811 Cr in Q3FY25 to Rs 961 Cr in Q3FY26, while the QoQ went up by 15 percent from Rs 834 Cr in Q2FY26. The YoY Net Profits growth is at 30 percent, going from Rs 70 Cr in Q3FY25 to Rs 91 Cr in Q3FY26, while the QoQ growth stood at 7 percent from Rs 85 Cr in Q2FY26.

The company has a 3 year sales CAGR of 3 percent, while the TTM is at 20  percent. The company’s 3 year profit CAGR is at 32 percent, while the TTM number is at 29 percent. The company also has a ROCE of 20 percent and a ROE of 15 percent.

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