MOSL VA TECH WABAG: Operating performance below expectations; misses guidance on all fronts
Va Tech Wabag: Operating performance below expectations; misses guidance on all fronts
(VATW IN, Mkt Cap USD0.4b, CMP INR452, TP INR575, 27% Upside, Buy)
- Results below expectations: sales declined 8% YoY to INR10.4b, below our estimate of INR14.3b. Revenue was impacted by weak execution of projects domestically. Domestic sales were hurt by GST implementation. Standalone sales declined 24% YoY to INR5.3b, while subsidiary sales grew 18% YoY to INR5b. Consol. EBITDA fell 28% YoY to INR0.95b, with the margin of 9% (-260bp YoY) below our estimate of 11.2%. Consol. recurring profit of INR596m, too, was below our estimate of INR1.0b. For FY18, sales stood at INR34.6b (+8% YoY), EBIDTA at INR2.9b (-1.6% YoY) and PAT at INR1.3b (+28% YoY).
- Order backlog down 7% YoY; signs framework contracts worth INR9.3b: In 4QFY18, consol. order intake improved 88% YoY to INR16.7b, while order backlog fell 7% YoY to INR68.1b. VATW has also signed framework contracts worth INR9.3b. Order inflow growth was supported by order finalization in the domestic market - including Rithala (INR2.9b), HMEL Bhatinda (INR2.9b) and Karmalichak (INR2.5b). Domestic tendering/orders are picking up for projects like Namami Ganga, Mumbai STP and the Chennai desalination plant.
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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