Summary
VA Tech Wabag Limited - Q3 FY26 Earnings Call Summary Friday, February 06, 2026, 4:00 PM IST
Event Participants
Executives 2 Shailesh Kumar (CEO - India Cluster), Skandaprasad Seetharaman (Group CFO)
Analysts 11 Adarsh Singh, Aniket Jain, Dhimant Shah, Hitesh, Kishore Kumar, Manish Maheshwari, Mihir, Nidhi Shah, Pravin, Santosh Keshri, Suyash Bhave, Tanmay Choudhary
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue (9M FY26) | ₹2,530 crores | +18% YoY; driven by steady execution across newer and larger projects ramping up. |
| EBITDA (9M FY26) | ₹347 crores | +20% YoY; maintained steady margins despite statutory labor code impacts. |
| EBITDA Margin | 13.7% | Within guided range of 13-15%; reflecting disciplined project selection and execution. |
| PAT (9M FY26) | ₹242 crores | +24% YoY; PAT margin stood at approximately 10%. |
| Order Book | ₹16,300 crores | Balanced mix: 64% EPC and 36% O&M; provides revenue visibility of over 4x. |
| Net Cash | ₹891 crores | Net cash exceeded ₹1,000 crores excluding transient HAM debt; 12th consecutive quarter net cash positive. |
| Working Capital | 101 Days | Significant improvement from previous levels due to tighter receivables and billing discipline. |
| ROCE / ROE | 19% / 15% | Reflects asset-light model and efficient capital management. |
Geographic & Segment Commentary
- India: Contributed 50% of 9M revenue. Focus remains on municipal (82% of order book) and industrial (18%) segments. Tendering momentum is strong in desalination and river cleaning (Ganga/Yamuna), with ₹3,000 crores in near-term visibility.
- Middle East & Africa (MEA): Key growth engine contributing to 50% of revenue and order book. Notable progress on Al Haer STP (200 MLD) and Yanbu Desalination (300 MLD) in Saudi Arabia. Geopolitics has not hindered progress due to multilateral funding.
- Rest of World (Europe/CIS/SE Asia): Europe is seeing high-tech bidding activity; CIS is in the business development phase with 2-3 active prospects. Southeast Asia remains a steady contributor to the international mix.
Company-Specific & Strategic Commentary
- WRIDDHI Strategy: Focus on profitable growth, maintaining net cash positive status, and technology-led project selection to ensure 13-15% EBITDA margins.
- Future Energy Solutions: Actively bidding for Green Hydrogen and Solar manufacturing projects (RenewSys). Data centers are emerging as a high-potential segment for water reuse and ultrapure water (UPW).
- Asset-Light / PPP Model: Transitioning HAM assets to an investment platform with Norfund; definitive agreements are in advanced stages. This will free up capital for minority stakes in future PPP opportunities.
- Banking & Liquidity: Onboarded two additional international banks; initiated use of insurance bonds as bank guarantee substitutes to optimize costs and non-funded limits.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | 15% - 20% CAGR | Medium-term target based on strong execution and ramping up of large international projects. |
| EBITDA Margin | 13% - 15% | Management expects to stay within this range through high-tech projects and O&M expansion. |
| Order Book Coverage | > 3x Revenue | Aim to maintain at least 3x EPC revenue visibility multi-annually. |
| Cash Conversion | Continued improvement | Tighter receivable management and higher international/industrial mix to drive liquidity. |
Risks & Constraints
| Risk | Context |
|---|---|
| Geopolitical Risk | Exposure to Middle East and Africa; mitigated by geographic diversification (CIS, SE Asia) and multilateral funding (World Bank, JICA, AIIB). |
| Receivables / Legacy Issues | Ongoing legal pursuit for recovery of ₹140 crores (TSGENCO/APGENCO); though written off, remains a management focus. |
| Domestic Market Stagnation | Domestic order book has remained flat relative to international growth; management expects conversion of ₹3,000 crore pipeline in FY27 to address this. |
Q&A Highlights
Order Pipeline & Preferred Bidding
- Question: What is the status of the current bid pipeline? (Nidhi Shah)
- Answer: There is visibility on ₹3,000 crores of orders where the company is well-positioned or L1. This includes a mix of Middle East and Indian jobs, specifically the Hadda ISTP project (Skandaprasad S.).
New Energy & Technology
- Question: How is the company addressing data centers and semi-conductors? (Dhimant Shah)
- Answer: WABAG is executing the RenewSys solar facility (UPW/ZLD). While semi-conductor fabrication is maturing slowly in India, WABAG is tracking international fab opportunities in Singapore (Shailesh Kumar).
O&M vs. EPC Margins
- Question: What drives the margin difference between municipal and industrial O&M? (Suyash Bhave)
- Answer: O&M generally offers superior margins to EPC. Strategically, WABAG is targeting more O&M and industrial jobs to bolster the 13-15% EBITDA range (Skandaprasad S.).
Norfund Investment Platform
- Question: What is the update on the Norfund platform? (Kishore Kumar)
- Answer: Due diligence is complete. Negotiation of definitive agreements is in advanced stages; closure is expected within a few months pending board approvals (Skandaprasad S.).
Key Takeaway
VA Tech Wabag delivered a robust Q3 FY26, characterized by 18% revenue growth and 24% PAT growth, supported by a healthy 13.7% EBITDA margin. The company achieved a historic milestone, surpassing ₹1,000 crores in net cash (excluding HAM debt), marking its 12th consecutive quarter as net cash positive. Strategic focus remains on international expansion (50% of order book) and high-technology segments like Desalination and Ultrapure Water for Green Hydrogen and Solar manufacturing. While the domestic order book remained relatively flat this quarter, a ₹3,000 crore pipeline provides strong near-term visibility. Management maintains its medium-term guidance of 15-20% revenue growth and 13-15% EBITDA margins, underpinned by an asset-light model and the upcoming Norfund investment platform. Continued focus on multilateral-funded projects and geographic diversification serves as a key hedge against geopolitical risks.
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