MOSL: VA TECH WABAG (Neutral)-Miss on all fronts, but order backlog provides strong revenue visibility
Va Tech Wabag: Miss on all fronts, but order backlog provides strong revenue visibility
(VATW IN, Mkt Cap USD0.2b, CMP INR300, TP INR331, 10% Upside, Neutral)
- performance below expectations: Consol. sales declined 35% YoY to INR6.8b (below our expectation of INR13.8b) in 4QFY19. Standalone sales were down 19% YoY to INR4.4b, while subsidiary sales fell 52% YoY to INR2.4b. The decline can be attributed to multiple projects reaching a near-completion stage and the lack of a meaningful pick-up in new projects. Consol. EBITDA declined 53% YoY to INR473m, with the margin of 7.0% (-270bp YoY) below our estimate of 9.1% due to operating de-leverage. Recurring profit of INR408m (-28% YoY) was below our estimate of INR675m. VATW incurred a forex loss of INR64m in the quarter.
- Order backlog providing robust revenue visibility: Order backlog as on date stands at INR85.9b (+26% YoY in 4QFY19), with order inflow of INR13.1b (-21% YoY). VATW has also signed framework contracts worth INR7b, which will get converted into firm orders after receiving advance from customers. The current order backlog provides strong revenue visibility of INR3.1x its FY19 revenue. VATW won two orders under the Namami Gange scheme worth INR10b, which will entail equity investment of INR150m.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.