MOSL: VA TECH WABAG (Buy)-Operating performance in-line-plans to raise funds to meet equity requirement in upcoming Namami Gange projects
​Va Tech Wabag: Operating performance in-line; plans to raise funds to meet equity requirement in upcoming Namami Gange projects
(VATW IN, Mkt Cap USD0.5b, CMP INR663, TP INR800, 20% Upside, Buy)
4QFY17 results in line with estimates at operating level: Consolidated sales grew 33% YoY to INR11.3b, in line with our estimate of INR11.1b. The strong revenue growth can be ascribed to pick-up in execution of key orders like Petronas, Polgawela, Amas and Bahrain projects. Standalone sales rose 28% YoY to INR7b, while subsidiary sales grew 44% YoY to INR4.2b. Consolidated EBITDA stood at INR1.3b (up 17% YoY) and margin of 11.6% (-164bp YoY) was in line with our estimate of 11.7%. Consolidated profit of INR0.8b was 23% above our estimate on account of lower than estimated tax rate (29.5% v/s estimate of 46%).
Order backlog at INR80b provides robust revenue visibility: In 4QFY17, consolidated order intake declined 51% YoY to INR8.7b. The decline was on account of higher base in 4QFY16 (finalization of big ticket orders like Chennai waste water recycle project (INR3.5b) and Srilanka-based Polgawela project (INR7.2b). Key projects finalized during the quarter were: Dangote refinery order worth INR6.8b and Indonesia-based order worth INR2.1b. Order backlog as of 4QFY17 was up 10% YoY to INR80.1b.
VA Tech Wabag Limited is a holding company engaged in water treatment field. The Company's principal activities include design, supply, installation, construction and operational management of drinking water, waste water treatment, industrial water treatment and desalination plants. The Company's segments include India and Rest of World. Its product portfolio includes water reclamation, municipal used water treatment, industrial effluent treatment, anaerobic sludge treatment, and industrial water reuse and recycling. The Company has four clusters: India, Europe, Middle East & Africa (MEA), and Latin America (LATAM). The India cluster provides end-to-end water solutions for drinking water and wastewater plants, both in the municipal and industrial sectors. The European cluster caters to small and mid-sized projects. The MEA cluster has two major regions: the Middle East and Africa. The LATAM cluster has countries, including Brazil, Chile, Colombia, Ecuador, Mexico and Peru.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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