(1/16)
About VA Tech Wabag-
It is one of the world’s leading companies in the water treatment space. It provides a complete range of water treatment solutions. It has a strong presence in India, the Middle East, Philippines, Singapore, Tunisia, Turkey & the Czech Republic.
About VA Tech Wabag-
It is one of the world’s leading companies in the water treatment space. It provides a complete range of water treatment solutions. It has a strong presence in India, the Middle East, Philippines, Singapore, Tunisia, Turkey & the Czech Republic.
(2/16)
Q3 Numbers-
1. In 3QFY22, consolidated revenue stood at ₹7.4bn; a decline of 6.3% YoY; the fall in top-line was
driven by a decline in overseas revenue, -17.9% YoY while domestic revenues remain
flat (₹5.1bn).
2. Gross margin improved despite inflation by 190bps YOY
Q3 Numbers-
1. In 3QFY22, consolidated revenue stood at ₹7.4bn; a decline of 6.3% YoY; the fall in top-line was
driven by a decline in overseas revenue, -17.9% YoY while domestic revenues remain
flat (₹5.1bn).
2. Gross margin improved despite inflation by 190bps YOY
(3/16)
Order Book-
VATW had a healthy rise in order book as it rose 3x YoY at ₹28.3Bn.
Order backlog during 3QFY22 stood at ₹100.7bn, providing
healthy revenue visibility.
The company is seeing good traction in the Middle East (Saudi Arabia and Qatar) Africa & India
Order Book-
VATW had a healthy rise in order book as it rose 3x YoY at ₹28.3Bn.
Order backlog during 3QFY22 stood at ₹100.7bn, providing
healthy revenue visibility.
The company is seeing good traction in the Middle East (Saudi Arabia and Qatar) Africa & India
(4/16)
Overseas Projects:
VATW won $100mn order in Dubai related to engineering &
procurement to 545mn LPD Reverse Osmosis plant.
3 projects in progress-
• 120MLD sewage plant in Saudi Arabia
• 300MLD new Jeddah Airport
• The Amour Gas Project in Russia.
Overseas Projects:
VATW won $100mn order in Dubai related to engineering &
procurement to 545mn LPD Reverse Osmosis plant.
3 projects in progress-
• 120MLD sewage plant in Saudi Arabia
• 300MLD new Jeddah Airport
• The Amour Gas Project in Russia.
(5/16)
Water security is the most important factor in ESG & sustainability ratings are expected to lead to healthy order inflows.
Industrial water treatment has been growing at ~15% pa. which is expected to gain traction with more countries investing in green projects.
Water security is the most important factor in ESG & sustainability ratings are expected to lead to healthy order inflows.
Industrial water treatment has been growing at ~15% pa. which is expected to gain traction with more countries investing in green projects.
(6/16)
Key Growth Drivers-
1. Strong Player in Water Treatment Business:
VATW is present in all the major segments of the water treatment industry. It is the largest water treatment company in India and has completed over 2,300 projects over the last three decades.
Key Growth Drivers-
1. Strong Player in Water Treatment Business:
VATW is present in all the major segments of the water treatment industry. It is the largest water treatment company in India and has completed over 2,300 projects over the last three decades.
(7/16)
2. Diversified Business-
Its order book is fairly diversified as no single state or a country, other than India, accounts for over 20% of its order book. The company’s top 10 projects account for 50% of the total order book.
2. Diversified Business-
Its order book is fairly diversified as no single state or a country, other than India, accounts for over 20% of its order book. The company’s top 10 projects account for 50% of the total order book.
(8/16)
3. Strong Order Book; Revenue Visibility:
They have a strong revenue visibility with an outstanding order book of about 3.4x of its annual revenue. The operations & maintenance contracts form about 39% of the OB. These contracts tend to be executed over several years.
3. Strong Order Book; Revenue Visibility:
They have a strong revenue visibility with an outstanding order book of about 3.4x of its annual revenue. The operations & maintenance contracts form about 39% of the OB. These contracts tend to be executed over several years.
(9/16)
4. Low default risk-
Most of VATW’s projects are funded by central govt such as Namami Gange Mission, Atal Mission for Rejuvenation& Transformation,reducing any customer default risk. During FY16-FY21, it’s liquidated damages averaged only 0.2% of its cumulative revenue.
4. Low default risk-
Most of VATW’s projects are funded by central govt such as Namami Gange Mission, Atal Mission for Rejuvenation& Transformation,reducing any customer default risk. During FY16-FY21, it’s liquidated damages averaged only 0.2% of its cumulative revenue.
(10/16)
5. Strong Credit Metrics Starting FY22:
The company may remain net cash positive over FY22-FY24. The company’s net finance coverage (EBITDA/net finance cost) stood at 2.7x in FY21 (FY20: 2.3x). This ratio is expected to increase above 3.5x over FY22-FY24.
5. Strong Credit Metrics Starting FY22:
The company may remain net cash positive over FY22-FY24. The company’s net finance coverage (EBITDA/net finance cost) stood at 2.7x in FY21 (FY20: 2.3x). This ratio is expected to increase above 3.5x over FY22-FY24.
(11/16)
6. Adequate Liquidity-
VATW has cash at hand of ₹3bn. They should generate strong, positive FCF due to strong EBITDA & a limited further rise in working cap requirement.
The maximum monthly utilisation of the fund based limits averaged 86% over 1 year ended July 2021
6. Adequate Liquidity-
VATW has cash at hand of ₹3bn. They should generate strong, positive FCF due to strong EBITDA & a limited further rise in working cap requirement.
The maximum monthly utilisation of the fund based limits averaged 86% over 1 year ended July 2021
(12/16)
Key Risks-
1. Consolidated FCF (excluding growth capex) turning negative or consolidated net finance coverage reducing below 2.5x or average monthly utilisation of the fund-based facilities sustaining above 80%.
2. Sharp rise in commodity cost for overseas contracts.
Key Risks-
1. Consolidated FCF (excluding growth capex) turning negative or consolidated net finance coverage reducing below 2.5x or average monthly utilisation of the fund-based facilities sustaining above 80%.
2. Sharp rise in commodity cost for overseas contracts.
(13/16)
VA Tech’s Shareholding-
Promoters - 21.7% vs 21.7% YoY
FII - 18% vs 14.5% YoY
DII - 3.6% vs 3.7% YoY
Others - 56.6% vs 60% YoY
Pledge ( % of Promoters Holdings) - 0.00% vs 12.4% YoY
VA Tech’s Shareholding-
Promoters - 21.7% vs 21.7% YoY
FII - 18% vs 14.5% YoY
DII - 3.6% vs 3.7% YoY
Others - 56.6% vs 60% YoY
Pledge ( % of Promoters Holdings) - 0.00% vs 12.4% YoY
(14/16)
Q3 Result Summary (in ₹Bn) -
Revenue- ₹7,455 vs ₹7,960 YoY
EBITDA - ₹762 vs ₹702 YoY
PAT - ₹462 vs ₹359 YoY
Tax Incidence - 17.5% vs 14.6% YoY
Q3 Result Summary (in ₹Bn) -
Revenue- ₹7,455 vs ₹7,960 YoY
EBITDA - ₹762 vs ₹702 YoY
PAT - ₹462 vs ₹359 YoY
Tax Incidence - 17.5% vs 14.6% YoY
(15/16)
Any favourable announcement on Namami Ganga project & pick-up in domestic execution would provide growth visibility. The stress on working cap continues to
dampen margin in the short run.
The long term story remains intact as demand for water related project increase!
Any favourable announcement on Namami Ganga project & pick-up in domestic execution would provide growth visibility. The stress on working cap continues to
dampen margin in the short run.
The long term story remains intact as demand for water related project increase!
(16/16)
What do you think about long term growth prospect for VA Tech Wabag?
@caniravkaria @Jitendra_stock @DhanValue @kuttrapali26 @harshmadhusudan @ipo_mantra
Comment down below! 👇🏻
What do you think about long term growth prospect for VA Tech Wabag?
@caniravkaria @Jitendra_stock @DhanValue @kuttrapali26 @harshmadhusudan @ipo_mantra
Comment down below! 👇🏻
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