VA Tech Wabag Target Price at INR 1,900: 57% Upside Seen

Motilal Oswal Reaffirms 'BUY' on VA Tech Wabag

Motilal Oswal Financial Services (MOFSL) has reiterated its bullish outlook on VA Tech Wabag (VATW), a leading water technology company in India. The brokerage maintained its ‘BUY’ rating on the stock, setting a target price of INR 1,900 per share. This target implies a significant potential upside of 57% from the current market price of INR 1,209. The firm's confidence is anchored in Wabag's record-high order book, a clear trajectory toward improved margins, and its strong strategic position within the global water infrastructure sector, which is experiencing structural growth due to a worldwide focus on sustainable resource management.

The Rekha Jhunjhunwala Conviction

A significant endorsement of VA Tech Wabag's long-term value comes from esteemed investor Rekha Jhunjhunwala. As of January 2026, her holdings in the company amount to 50 lakh shares, which constitutes an 8.03% stake. This investment, valued at approximately INR 602.9 crore, underscores a deep-seated belief in the company's growth story and its ability to deliver sustained returns. This long-term commitment from a notable market figure provides an additional layer of confidence for the investor community, highlighting the company's solid fundamentals and promising future.

Record Order Book Ensures Revenue Visibility

As of December 2025, VA Tech Wabag's order book reached an all-time high of over INR 16,000 crore. This translates to a book-to-bill ratio of 4.6x, its strongest ever, providing clear revenue visibility for the next three to four years. The company also holds preferred bidder status for additional projects worth INR 3,000 crore and maintains a robust bidding pipeline valued between INR 15,000 crore and INR 20,000 crore. This strong backlog supports projections for an annual revenue growth rate of 15–20%, offering a stable and predictable path for expansion.

Recent International Project Wins

The company's operational strength is demonstrated by several recent high-value contract wins. In December 2025, Wabag secured a repeat order worth up to INR 700 crore from the Saudi Water Authority for a technologically advanced 50 MLD Brackish Water Reverse Osmosis (BWRO) plant. During the same period, it was also named the preferred bidder for the Hadda Independent Sewage Treatment Plant (ISTP) project in Saudi Arabia. A month earlier, in November 2025, the company won a major contract in Nepal from the Melamchi Water Supply Development Board for a 255 MLD water treatment plant, a project funded by the Asian Development Bank (ADB). These wins highlight Wabag's global competitiveness and its focus on securing well-funded, low-risk projects.

Strategic Shift Toward Higher Margins

VA Tech Wabag is undergoing a strategic transformation, moving away from its historical reliance on volume-driven but lower-margin Engineering, Procurement, and Construction (EPC) contracts. The company is now increasingly focusing on high-margin segments such as Operations & Maintenance (O&M) and industrial projects. This pivot, combined with the deployment of proprietary technologies and strategic regional partnerships, is expected to drive significant margin expansion. The management has guided for EBITDA margins to improve to a range of 14–15% by FY28, reflecting a more profitable business mix.

Financial Performance and Growth Outlook

The company's operational improvements are already reflected in its financial performance. The projected growth indicates a significant acceleration compared to the post-pandemic recovery phase.

This forecast, driven by strong order execution and a better project mix, points to a new phase of accelerated and profitable growth for the company.

Valuation and Potential for Market Rerating

Currently, VA Tech Wabag trades at approximately 17 times its FY27 estimated earnings per share (EPS), a discount to its five-year average multiple. Motilal Oswal has assigned a target multiple of 26x FY27E EPS to arrive at its INR 1,900 target price. The brokerage justifies this premium valuation, which is one standard deviation above the long-term mean, by citing the company's structural shift toward higher-quality growth, expanding margins, and superior return ratios. The company's strong free cash flow generation and debt-free balance sheet further strengthen its investment case.

Tapping into the Ultra-Pure Water Market

Looking ahead, VA Tech Wabag is poised to capitalize on emerging opportunities, particularly in the ultra-pure water segment. This niche market, catering to industries such as semiconductors, pharmaceuticals, and advanced manufacturing, represents an estimated INR 3,500 crore opportunity for the company. Expanding into this high-tech area aligns with global industrial trends and opens up a new, high-value revenue stream.

Conclusion

VA Tech Wabag has successfully evolved from a mid-cap EPC contractor into a global water technology specialist. The combination of a record order book, a strategic focus on high-margin businesses, a healthy balance sheet, and the backing of prominent investors like Rekha Jhunjhunwala creates a compelling investment thesis. With clear earnings visibility and multiple growth levers, the company is well-positioned to be a credible compounding story within India's broader infrastructure and sustainability landscape.