Va Tech WABAG (WABAG), a leading player in the water technology space, expects to grow at a CAGR of 15-20 per cent and aims to sustain EBITDA margins in the range 13-15 per cent range over the next 3-5 years driven by favourable growth prospects in India, Middle East, and African markets.
While the ₹2,856-crore company’s order book remains strong at about ₹11,400 crore, which gives the company good 3-year revenue visibility, it anticipates stronger growth in the coming months with huge bright scope to secure more orders. The company expects the order book to grow to about ₹16,000 crore by the end of this fiscal.
In addition to domestic expansion, WABAG is strategically focusing on expanding its international presence. Rajiv Mittal, Chairman and Managing Director, highlighted during the Q4FY24 earnings call that the Middle East, Africa, South-East Asia, and CIS countries as key regions for growth.
Growing global presence
He highlighted the Middle East’s potential as a future growth hub not only in the water sector but also across various industries, citing countries like Saudi Arabia and the UAE as driving increased orders for the company. He noted that the region’s projects do not necessarily require multilateral funding due to their ample oil-derived funds.
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The Saudi Arabian government has allocated $28 billion to support new wastewater projects, with a target to reuse 35 per cent of the country’s treated wastewater by 2030. WABAG anticipates significant traction for new orders in the Middle East over the next 12-18 months. The company has submitted bids totaling $1 billion in the Gulf region alone, reflecting the strength of its pipeline, with individual projects ranging from $100 million to $200 million each. Competition is limited, with only three or four companies bidding on each project.
“These projects are in the technical evaluation stages. In the next couple of months, price bids will start to be opened and preferred bidders declared. We are confident in growing our pipeline,” said S Skandaprasad, Chief Financial Officer of Va Tech WABAG.
Africa, Asia Pacific markets
In Africa, Egypt is emerging as a promising market. WABAG has pre-qualified for large projects, such as a planned 1,000-MLD desalination plant, demonstrating the company’s global capability and readiness for mega projects. Egypt has 21 planned projects for 3,300 MLD with a $3-billion investment. Additionally, the World Bank has approved about $1.4 billion for water projects in Africa.
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In Asia, countries like Singapore, the Philippines, Vietnam, Indonesia, and Thailand have announced large-scale wastewater treatment and desalination projects under EPC and BOOT models. WABAG aims to capitalise on these opportunities, leveraging its strong references in the Asia Pacific region. Over the past four years, international markets have contributed about 40 per cent of WABAG’s topline on average.
Skandaprasad noted that the company has continued to generate cash, closing FY24 with a net cash-positive position of ₹236 crore. “We transitioned from being a net debt company to a net cash company. This is the fourth consecutive year where the company has generated a net cash position,” he added.