Va Tech Wabag Ltd, a global leader in water and wastewater treatment solutions, has been flagged by Geojit Financial Services with a buy rating and a target price of Rs 1,626, representing a 30% upside from its current market price of Rs 1,254. The brokerage’s positive outlook is underpinned by improving margins, strong order inflows, and expanding international operations.

Strong Operational Performance Drives Investor Confidence

The company reported a gross margin improvement of 227 basis points year-on-year to 25%, resulting in a gross profit growth of over 30%. This performance was largely driven by cost optimization and efficient execution during the quarter.

Va Tech Wabag’s order book stood at approximately Rs 15,100 crore, equivalent to 4.1 times its trailing twelve-month revenue and nearly 5 times its FY25 revenue. This substantial backlog ensures strong revenue visibility and supports sustained growth across domestic and international municipal and industrial markets.

Additionally, the company has a healthy order pipeline of over Rs 3,000 crore, with several key prospects nearing finalization. This indicates a strong pipeline of future projects, which could further bolster its financial performance in the coming quarters.

International Expansion and Diversification

International projects accounted for about 50% of the company’s year-to-date revenue, highlighting its expanding global footprint. Overseas exposure is increasing steadily, reducing reliance on domestic markets and improving diversification.

The Middle East remains a key growth driver for Va Tech Wabag, with significant investments in desalination, wastewater treatment, and water reuse infrastructure. The region’s growing demand for water solutions presents major opportunities, supported by large-scale infrastructure investments.

Moreover, the company is well-positioned to benefit from emerging sectors such as solar manufacturing, hydrogen projects, Bio-CNG, and data centers, which require advanced water treatment solutions. These sectors are expected to drive additional demand for the company’s services in the coming years.

Financial Projections and Institutional Holdings

According to Geojit Financial Services, Va Tech Wabag is expected to deliver strong financial growth over the next few years, with revenue projected to grow at an 18% compound annual growth rate (CAGR) between FY26 and FY28. EBITDA is forecast to grow even faster at a 27% CAGR, supported by margin expansion, improved operational efficiency, and a favorable business mix.

As of Q2FY26, Rekha Jhunjhunwala holds more than 8% stake in the company. The ace investor has maintained the same stake since Q3FY21, indicating long-term confidence in the company’s prospects.

Va Tech Wabag Ltd, headquartered in Chennai, is a multinational water technology company that designs, builds, and operates desalination, drinking water, and sewage treatment plants for municipal and industrial clients. It serves over 88 million people globally with sustainable water management solutions.

In the latest quarter, the company recorded a 18% year-on-year revenue growth, rising from Rs 811 crore in Q3FY25 to Rs 961 crore in Q3FY26. Quarterly growth from Q2FY26 to Q3FY26 was 15%, with revenue increasing from Rs 834 crore to Rs 961 crore.

The company’s net profits also grew by 30% year-on-year, from Rs 70 crore in Q3FY25 to Rs 91 crore in Q3FY26. Quarterly net profit growth was 7%, rising from Rs 85 crore in Q2FY26 to Rs 91 crore in Q3FY26.

Over the past three years, the company has recorded a 3% sales CAGR, while the trailing twelve-month (TTM) sales growth is at 20%. Profit growth over the same period is 32%, with the TTM number at 29%. The company’s return on capital employed (ROCE) stands at 20%, and its return on equity (ROE) is 15%.