Edelwiess' Fundamentals Review on Va Tech Wabag Ltd is as below,
Va Tech Wabag Ltd. (VTW) is a technology focused company providing complete lifecycle solution in water and waste water treatment space (including EPC and O&M services) across the Middle East, North Africa, Central & Eastern Europe, China and South East Asia. The company has asset light business model whereby it focuses on design and engineering work while capital intensive construction work is outsourced. It has witnessed a strong 25% CAGR in order inflows in the past three years, driven by a 22% CAGR in EPC and 47% CAGR in O&M. Further inflows are expected to be strong due to the impending increase in capex for water and sewage projects in India and international markets. The company has been reporting continuous improvement in margins for the past five years, led by the increased share of high margin O&M contracts and multi-geographical strategy (to reduce cost by servicing through low-cost locations such as Turkey, Philippines, etc.)
In the past five years (FY08-13), VTW’s revenues grew at a CAGR of 22% while the PAT jumped by 62%. It is expected to maintain strong growth of over 25% CAGR each in revenues and PAT in FY14-16E on the back of execution of strong order book of INR 5998 cr (3.5x FY14E revenue, including framework contract). We assign a Buy rating on the stock
