Va Tech Wabag stock climbs over 8% to 2-week high on ₹2700 crore order from Saudi Water Authority

Shares of Va Tech Wabag surged 8.24% on Friday, reaching a two-week high of ₹1,394 per share. This increase followed the company’s announcement of securing a significant ₹2,700 crore order from the Saudi Water Authority.

The order is for the Engineering, Procurement, Construction, and Commissioning (EPCC) of a 300 Million Litres per Day (MLD) Mega Sea Water Reverse Osmosis (SWRO) Desalination Plant in Yanbu, Saudi Arabia.

The EPCC contract covers the design, engineering, supply, construction, and commissioning of the new 300 MLD Mega Desalination Plant, which will be developed on a greenfield site on the west coast of Saudi Arabia, south of the Red Sea city of Yanbu al-Bahr. The project is expected to be completed within 30 months.

The desalination plant will employ dual media filters, a two-pass reverse osmosis process, and remineralization to produce high-quality potable water. This advanced facility is designed for superior energy efficiency and will meet the environmental standards set by Saudi Arabia, the company said in today’s exchange filing. 

Commenting on this order win, Mr Rohan Mittal, Head, Strategy & Business Growth, GCC, said, “We are extremely honored and proud to secure this mega order from prestigious customer SWA, which will contribute to the ambitious Saudi Vision 2030. This mega order is a testament to our expertise and commitment to delivering high-quality, sustainable water solutions worldwide. This win reinforces our position in the desalination sector, and we are confident that WABAG’s global leadership in desalination will grow further with this win.”

Va Tech Wabag has been active in Saudi Arabia for over 40 years, building and operating water and wastewater treatment plants. Since 1995, the company has constructed over 60 desalination plants in 17 countries, making significant contributions to global water security.

Steady order wins

In early August, the company secured a repeat order valued at approximately ₹415 crores from the Chennai Metropolitan Water Supply and Sewage Board (CMWSSB). This contract involves the operation and maintenance of the 110 MLD Sea Water Reverse Osmosis (SWRO) Desalination Plant at Nemmeli, Chennai, for a duration of seven years.

Additionally, in May, the company was awarded an ₹850 crore contract by Oman-based Nama Water Services. This order covers the operation and maintenance of the Al Duqm desalination plant for five years.

The company order book at the end of Q1 FY25 stood at ₹107 billion, including framework contracts, providing robust revenue visibility. Va Tech Wabag is a pure-play water technology multinational offering a complete range of technologies and services for Total Water Solutions in both the municipal and industrial sectors.

In the recent Union Budget, Finance Minister Nirmala Sitharaman announced a comprehensive water supply and sanitation plan for 100 cities, highlighting the government’s commitment to enhancing water infrastructure.

Trades 350% higher from February 2023 lows

The stock has surged sharply in recent months, driven by consistent order wins, healthy financial performance, and the increasing demand for water solutions in India. Since February 2023, the stock has risen by an impressive 350%, maintaining high levels throughout this period. So far this year, the stock has jumped 115%, following a massive 92% increase in calendar year 2023.

According to Trendlyne shareholding data, Rekha Jhunjhunwala, the wife of the late investor Rakesh Jhunjhunwala, held an 8.04% stake in the company as of the end of the June 2024 quarter.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.