India’s urban water management story is no longer just about announcements and allocations. Large sewage treatment and wastewater recycling projects are moving from approval to execution. Order books across listed water engineering companies remain healthy. The real question now is not whether demand exists, but which players can convert those orders into steady revenues and profits over the next two to three years.
The Execution Challenge: From Order Books to Bottom Line
Some companies are sitting on sizeable backlogs with improving cash positions and stronger operation and maintenance (O&M) mixes that provide revenue visibility.
Others are navigating project delays, funding bottlenecks or margin pressures from new capex cycles. In a capital-intensive business like water infrastructure, execution discipline and working capital management matter as much as headline order inflows.
That is what makes this phase interesting for investors.
Urban water projects are long-gestation and often backed by sovereign or multilateral funding, which supports medium-term demand visibility. At the same time, periodic execution slowdowns and margin volatility create entry opportunities. For investors willing to look beyond the theme and focus on earnings conversion, this could be an opportunistic window.
For this analysis, we have selected only three stocks where urban water and wastewater form a meaningful part of the business and where recent disclosures allow a clear assessment of order visibility, execution quality and balance sheet strength.
We have avoided companies with marginal exposure or overly diversified revenue streams. The aim is not to capture every name in the sector, but to focus on those where the gap between order book and earnings delivery can be meaningfully evaluated.
#1 VA Tech Wabag: The Desalination & EPC Giant
Va Tech Wabag operates in the water treatment sector. Its principal activities include design, supply, installation, construction and operational management of drinking water, waste water treatment, industrial water treatment and desalination plants.
VA Tech Wabag reported steady growth for quarter ended December 2025, driven by project execution and a strong overseas mix.
Consolidated revenue for the quarter rose over 18% year-on-year (YoY) to Rs 961 crore. Net profit increased 30% to Rs 91 crore. The company said performance remained aligned with its medium-term strategy of profitable growth and balance sheet discipline.
The 36% O&M Factor: Why recurring revenue is the new margin protector
The order book stood at over Rs 163 billion at the end of the period. Around 64% of the backlog is EPC projects, while 36% comes from operation and maintenance (O&M) contracts, which provide recurring income. International projects account for nearly half the order book.
Management indicated that overseas contracts typically offer better working capital cycles and stronger payment security, especially those backed by sovereign or multilateral funding.
Execution remains central to the story. The 400 million liters of water per day (MLD) desalination project in Chennai is progressing, with marine works nearing completion. The 200 MLD Pagla wastewater project in Bangladesh is advancing.
In Saudi Arabia, the 200 MLD Al Haer sewage treatment plant is under execution, and preparatory work has started on the 300 MLD Yanbu desalination project. In India, the Ghaziabad HAM project achieved final commissioning in January 2026.
On the balance sheet front, Wabag remained net cash positive for the 12th consecutive quarter. Gross cash stood at Rs 1,080 crore, with net cash at Rs 891 crore as of December 2025. Working capital days improved to 101 days.
Urban water infrastructure demand remains structurally strong. However, the key test lies in converting the large order book into sustained revenue and cash flow. With a diversified backlog and improving balance sheet, Wabag’s near-term performance will depend on execution momentum rather than fresh order wins.
In the past year, share price of VA Tech Wabag is down 8.5%.
VA Tech Wabag 1 Year Share Price Chart
#2 Ion Exchange (India): The High-Tech Resin Expansion
Ion Exchange (India) is engaged in a wide range of solutions across the water cycle from pre-treatment to process water treatment, waste water treatment, recycle, zero liquid discharge, sewage treatment, packaged drinking water, sea water desalination etc.
Ion Exchange (India) Ltd reported a steady rise in revenue for the third quarter of FY26, even as margins remained under pressure due to project mix and commissioning costs at its new facility.
For the quarter ended December 2025, the company posted consolidated operating income of Rs 734.4 crore, up 6% YoY. Net profit stood at Rs 21 crore down from Rs 50 crore in the same quarter last year, reflecting margin compression during the period.
Profitability was impacted by a change in execution mix in the engineering business and higher depreciation and interest costs linked to the newly commissioned Roha plant.
The engineering division, which remains the core revenue driver, reported quarterly revenue of Rs 429.7 crore, largely flat on a yearly basis. Execution was affected by slower progress in certain Jal Jeevan Mission projects in Uttar Pradesh due to funding delays, as well as deferment of high-value international dispatches to the fourth quarter.
Despite this, the order book remains strong at Rs 2,833 crore, with order inflow of Rs 516 crore during the quarter. Management indicated that international projects and medium-sized domestic opportunities are contributing to the backlog.
The company has also secured solar-sector contracts aggregating Rs 205 crore during the quarter, focused on ultra-pure water systems and zero liquid discharge solutions.
Ion Exchange continues to position itself in high-tech water treatment applications such as semiconductors, solar manufacturing, data centres and green hydrogen. The management said it remains selective in bidding for large EPC projects, prioritising profitability and cash flow discipline over aggressive order growth.
A key strategic development is the Roha resin manufacturing facility. The total project cost is estimated at around Rs 450 crore, of which nearly Rs 285 crore has been capitalised so far, with the balance under capital work-in-progress. Around 40–45% of the plant has been commissioned as of the third quarter.
The plant is dedicated to ion exchange resins, largely for export markets. Management expects full commissioning by next year and targets 25% capacity utilisation in FY27. The facility has been designed as a zero liquid discharge and circular plant, which raised upfront capital expenditure but is expected to enhance long-term sustainability and margins.
Looking ahead, the company expects stronger execution in the fourth quarter led by international project invoicing, though legacy projects and pending Jal Jeevan Mission receivables may continue to pressure near-term profitability.
Over the longer term, it remains focused on higher-margin water treatment technologies, membrane and resin expansion, and disciplined order selection, with steady order visibility supporting a measured outlook.
In the past year, share price of Ion Exchange (India) has tumbled 26.6%.
Ion Exchange (India) 1 Year Share Price Chart
#3 Felix Industries: The Zero Liquid Discharge (ZLD) Play
Incorporated in 2012, Felix Industries offers total water and environmental solutions.
Felix Industries reported sharp growth in the third quarter of FY26, supported by higher execution across its water, waste and recycling verticals. Revenue from operations rose 243% YoY to Rs 26.8 crore in Q3 FY26. Net profit for the quarter stood at Rs 4.9 crore, up 6% YoY, even as tax outgo increased sharply.
The company’s focus remains on Zero Liquid Discharge (ZLD) systems and industrial wastewater solutions, segments that are benefiting from tighter compliance norms. The India ZLD market is projected to expand steadily through FY30, supported by mandatory norms for textile, distillery, refinery and power units.
Felix has secured a mix of long-term contracts across oil and gas, steel, food and beverage and semi-government entities. A Rs 40 crore five-year waste management agreement in Oman offers two income sources from services and sales of recycled materials, and a Rs 63.6 crore 10-year O&M contract with a food and beverage company are significant achievements.
Additionally, the company has implemented build, own, operate, and transfer (BOOT) based ZLD and water treatment systems in Gujarat, including multi-year agreements for projects worth Rs 140.1 crore and Rs 22 crore annually.
New business divisions and domestic and international growth, according to management, should drive FY26 revenue to rise much more than FY25. The company is also growing its footprint in Oman and becoming ready for the ever-increasing demands of waste management and water infrastructure.
Overall, the industry is still doing well. India’s water and wastewater treatment industry is expected to nearly triple by FY33 as solid waste generation keeps rising. Like other project-led businesses, revenue recognition depends on client permissions and completion dates.
Felix’s most recent numbers demonstrate a lot of speed, but sustaining profitability necessitates effective working capital management and timely conversion of business profits into cash flows. It is visible order inflow. The next phase will test execution depth and margin stability as scale increases.
In the past year, share price of Felix Industries has rallied 36.6%.
Felix Industries 1 Year Share Price Chart
Analyzing the Financial Strength of Water Engineering Leaders
Let’s now turn to the valuations of the companies in focus, using the Enterprise Value to EBITDA multiple as a yardstick.
Valuations of Companies in focus
| Sr No | Company | EV/EBITDA Ratio | 3-Year Avg EV/EBITDA | Industry Median | ROCE | ROE |
| 1 | VA Tech Wabag | 13.6 | 15.6 | 11.6 | 19.7% | 14.6% |
| 2 | Ion Exchange | 16.6 | 22.0 | — | 22.3% | 18.7% |
| 3 | Felix Industries | 11.6 | 28.0 | — | 14.3% | 11.7% |
If we compare return ratios, Ion Exchange is currently the strongest. Its ROCE stands at 22.3% and ROE at 18.7%. VA Tech Wabag follows with a ROCE of 19.7% and ROE of 14.6%. These are solid numbers for a business that needs continuous capital investment. Felix Industries reports a ROCE of 14.3% and ROE of 11.7%. Since it is still expanding, its return profile is lower than the other two.
On valuations, Ion Exchange trades at 16.6 times EV/EBITDA. This is lower than its three-year average of 22 times, but it still reflects some premium. VA Tech Wabag trades at 13.6 times, slightly below its three-year average of 15.6 and near the industry median of 11.6. Felix Industries trades at 11.6 times EV/EBITDA. That is much lower than its three-year average of 28 times, showing a clear fall in valuation multiples.
The water treatment space benefits from regulatory push and steady demand. However, these are project-based companies. Revenue depends on execution speed. Cash flows depend on collections. Margins depend on cost control.
Wabag has scale and international presence. Ion Exchange has a mix of engineering and specialty solutions. Felix is smaller but growing into new segments. All three are exposed to the same theme. What will matter now is execution and balance sheet discipline over the next few years.
Conclusion
The water treatment story in India is real. Cities need better sewage systems. Industries are under pressure to treat and reuse water. Government spending is also supporting the sector. So the opportunity is clearly there.
But this is not an easy business. Projects take time. Payments can get delayed. Margins can move depending on execution. A strong order book sounds good, but what matters is how much of it turns into steady profit and cash flow.
Each of these companies brings something different to the table. One has scale. One has stronger return ratios. One is still building its base. The theme is common, but outcomes can vary.
For investors, the focus should be simple. Track execution. Track margins. Track cash flow. Over time, the companies that deliver consistently are likely to stand out more than those that just talk about growth.
Disclaimer:
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Ekta Sonecha Desai has a passion for writing and a deep interest in the equity markets. Combined with an analytical approach, she likes to deep dive into the world of companies, studying their performance, and uncovering insights that bring value to her readers.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
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