VA Tech Wabag Q2 Review - Healthy Execution, But Cashflow Concerns Persists: ICICI Securities
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ICICI Securities Report
VA Tech Wabag Ltd.’s Q2 FY22 healthy performance was supported by pick-up in execution leading to healthy operating margins. Revenues grew 12.4% YoY to Rs 6.8 billion.
Despite commodity cost inflation, VA Tech Wabag was able to increase gross margin by 270 basis points YoY leading to an Ebitda margin expansion of 116 bps YoY.
Chennai 400 million of litres per day desalination bids are close to completion and might get awarded in Q1 FY23 according to the management.
Strong orderbook of Rs 100 billion (3.2 times trailing twelve months sales) lends visibility; however, 34% of it comprises operation and maintenance orders, which restricts near-term growth.
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