VA Tech WABAG (WABAG), a global leader in the water technology sector, has set ambitious growth targets, aiming for a compound annual growth rate (CAGR) of 15-20% over the next 3-5 years. The company also aims to maintain its EBITDA margins within the 13-15% range, driven by robust growth prospects in key markets such as India, the Middle East, and Africa.
WABAG, currently valued at ₹2,856 crore, boasts a strong order book of approximately ₹11,400 crore, providing solid revenue visibility for the next three years. The company anticipates that its order book will expand to about ₹16,000 crore by the end of this fiscal year, reflecting an optimistic outlook for securing additional contracts.
Strategic Global Expansion
Rajiv Mittal, Chairman and Managing Director of WABAG, highlighted during the Q4 FY24 earnings call that the company is focusing on strategic international expansion, particularly in the Middle East, Africa, South-East Asia, and CIS countries. He noted the immense potential in the Middle East, citing countries like Saudi Arabia and the UAE as significant drivers of new orders due to their substantial oil-derived funds, which reduce reliance on multilateral funding.
Saudi Arabia has earmarked $28 billion for new wastewater projects, with a target to reuse 35% of treated wastewater by 2030. WABAG expects substantial traction for new orders in the Middle East over the next 12-18 months, having already submitted bids totaling $1 billion in the Gulf region. Individual project bids range from $100 million to $200 million, with only a few competitors bidding on each project, indicating limited competition and a strong pipeline.
“These projects are in the technical evaluation stages. In the next couple of months, price bids will start to be opened and preferred bidders declared. We are confident in growing our pipeline,” said S Skandaprasad, Chief Financial Officer of VA Tech WABAG.
Promising Markets in Africa and Asia Pacific
In Africa, Egypt is emerging as a promising market, with WABAG pre-qualified for major projects, including a planned 1,000-MLD desalination plant. Egypt has outlined plans for 21 projects totaling 3,300 MLD, with a $3-billion investment. Additionally, the World Bank has approved around $1.4 billion for water projects in Africa, presenting further opportunities for WABAG.
In the Asia Pacific region, countries such as Singapore, the Philippines, Vietnam, Indonesia, and Thailand are planning large-scale wastewater treatment and desalination projects under EPC and BOOT models. WABAG aims to leverage its strong references in the region to capitalize on these opportunities. Over the past four years, international markets have contributed approximately 40% of WABAG’s topline.
Financial Strength and Future Outlook
WABAG’s financial position remains strong, with the company closing FY24 with a net cash-positive position of ₹236 crore. “We transitioned from being a net debt company to a net cash company. This is the fourth consecutive year where the company has generated a net cash position,” noted Skandaprasad.
With a strong order book, strategic global expansion plans, and a robust financial position, VA Tech WABAG is well-positioned for significant growth in the coming years. The company’s proactive approach to securing high-value contracts and expanding its footprint in key international markets underscores its commitment to sustaining long-term growth and profitability.
