The extension of the Jal Jeevan Mission 2.0 has put the focus on many stocks from the water management segment. The share price of VA Tech Wabag, a water technology company, is down nearly 3% intra-day today, but the stock has gained 5% in 5 days. Domestic brokerage house Motilal Oswal sees scope for further upside. 

It has reiterated a ‘Buy’ rating on the stock with a target price of Rs 1,900. This implies nearly 48% upside from the current share price. Though there are concerns about its Middle East exposure, the stock is also in focus after it secured a contract worth more than Rs 1,000 crore from the Chennai Metropolitan Water Supply and Sewerage Board (CMWSSB) to refurbish a 45 million litres per day (MLD) Tertiary Treatment Reverse Osmosis (TTRO) plant in Chennai.

Motilal Oswal bullish on VA Tech Wabag

Here are three reasons why Motilal Oswal remains bullish on the VA Tech Wabag  and is optimistic about the company’s growth outlook.

#1. Rs 16,300 crore order book may drive revenue growth

With the latest contract win, VA Tech Wabag continues to maintain a strong order pipeline.  The company’s order book currently stands at over Rs 16,300 crore, which is around five times its FY25 revenue. In addition, the company has preferred bidder status in projects worth about Rs 3,000 crore. It is also actively bidding for projects worth Rs 15,000–20,000 crore, with an estimated win rate of around 30%.

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The brokerage believes the strong order pipeline provides visibility for revenue growth of 15–20% over the next three to four years for the company. 

“A robust order book of over Rs 16,300, preferred bidder in orders worth Rs 3,000 crore, and a strong bid pipeline of Rs 15,000-20,000 crore provide strong 15-20% revenue growth visibility over the next 3-4 years,” Motilal Oswal noted in its report.

#2. Projects remain on track despite Middle East: Motilal Oswal

Motilal Oswal noted that project execution for VA Tech Wabag, which has significant exposure to overseas markets, has remained normal so far despite the heightened conflict in the Middle East.

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International projects contributed around 50% of VA Tech Wabag’s revenue in the first nine months of FY26 and account for nearly 60–70% of the company’s order book, with the Middle East forming a major share.

#3. Focus on high-margin segments may boost Wabag’s margins: Motilal Oswal

The brokerage house noted that the company’s increasing focus on executing large-scale projects in high-margin segments such as engineering procurement (EP), industrial projects, and operations and maintenance (O&M) will help improve margins while supporting steady growth.

“Its greater focus on executing large-scale projects in high-margin segments such as EP, Industrial, and O&M augurs well for margins,” said Motilal Oswal.

Conclusion

Motilal Oswal believes that VA Tech Wabag’s growth will accelerate further after it delivered a compound annual growth rate (CAGR) of 4% in revenue, 18% in EBITDA, and 28% in profit after tax between FY21 -FY25. The brokerage house pointed out that the strong balance sheet and healthy free cash flow generation support the positive recommendation.

Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.