VA Tech Wabag's stock movement amid surging water infrastructure demand has been one of the main reasons for BUY Call by research house Geojit Investments Limited. In its latest recommendation, Geojit has reiterated a BUY CALL on the Chennai-headquartered multinational, pegging a compelling target price of Rs. 1,877 from the current market price of Rs. 1,382, implying a 36% upside. The research house highlights H1FY26's stellar 18.2% revenue surge to Rs. 1,569 crore, fueled by EPC municipal projects and OM industrial upticks, alongside a ballooning order book of Rs. 14,764 crore ex-framework contracts—offering nearly fourfold revenue visibility. Despite margin pressures from construction-heavy execution, Geojit forecasts a 17% revenue CAGR through FY27, with EBITDA climbing 21% and PAT expanding 26%, underpinned by net cash positivity and strategic wins in ultra-pure water and biogas domains. This positions Wabag as a linchpin in sustainable water solutions for municipal and industrial realms.

Financial Fortitude Amid Execution Surge

VA Tech Wabag, a vanguard in water technology, orchestrated H1FY26 consolidated revenue ascent of 18.2% year-over-year to Rs. 1,569 crore, propelled by a 45% surge in EPC municipal projects and a 93% spike in OM industrial activity, though tempered by subdued EPC industrial performance.Q2FY26 sales rocketed 19.2% to Rs. 835 crore, with PAT vaulting 20.6% to Rs. 85 crore, culminating in H1 PAT growth of 20.4% to Rs. 151 crore.

EBITDA expanded 5.7% to Rs. 184.9 crore over H1, yet Q2 margins contracted 266 basis points to 10.7% due to escalated cost of sales from higher EPC weighting.Other income ballooned 201.4% in Q2, courtesy forex windfalls, bolstering PBT 19.9%.

Order Book Bulwark Ensures Visibility

The company's order book, excluding framework contracts, burgeoned 10.1% year-over-year to Rs. 14,764 crore, manifesting 38% OM contracts for annuity-like cash flows and nearly 50% international exposure.H1FY26 inflows hit Rs. 3,500 crore, including marquee bids exceeding Rs. 3,000 crore domestically and abroad.

• RenewSys Triumph: Advanced ultra-pure water, effluent treatment, and zero-liquid discharge for Hyderabad solar facility.
• Biogas Milestone: Uttar Pradesh compressed biogas upgradation unit.
• Data Center Foray: Membrane tech prowess targets cooling water needs in burgeoning sector.

Management reaffirms 15-20% revenue CAGR and 13-15% EBITDA margins medium-term, with net cash ex-HAM at Rs. 675 crore for 11 straight quarters and NWC days at 121 signaling operational rigor.Geojit trims FY26/27 EBITDA margins by 52-55 bps anticipating EPC dominance, yet projects revenue at 17% CAGR to Rs. 4,489 crore by FY27.

Projections Paint Robust Trajectory

Geojit's forward-looking estimates underscore resilience: FY26 revenue at Rs. 3,715 crore (13% growth), EBITDA Rs. 478 crore (12.9% margin), PAT Rs. 356 crore (21% uptick), escalating to FY27 revenue Rs. 4,489 crore (21%), EBITDA Rs. 622 crore (13.9%), PAT Rs. 466 crore (31%).ROE ascends from 14.9% to 17.4%, with EPS at Rs. 57.3 (FY26) and Rs. 75.1 (FY27).

Valuation at 25x FY27E EPS yields the Rs. 1,877 target, trading at 24.4x FY26E PE versus 18.6x FY27E, with EV/EBITDA 16.7x/14.2x.

Strategic Support and Shareholder Snapshot

Promoter holding steady at 19.1%, FIIs 18.4%, MFs/Institutions 4.5%, public 58%—nil pledges. Beta 1.7 reflects volatility, market cap Rs. 8,606 crore, enterprise value Rs. 8,176 crore, dividend yield 0.3%.Price underperforms Sensex: -24.9% absolute 1-year versus +6.1% benchmark.

Investor Levels and Targets

For discerning investors, key support pivots at Rs. 1,300 (recent lows), Rs. 1,200 (50-day SMA), Rs. 1,100 (52-week trough). Upside triggers: Rs. 1,500 (200-day SMA), Rs. 1,700 (Fib 38.2% retrace), culminating at Geojit's Rs. 1,877 target—36% accretion potential.Accumulate on dips below Rs. 1,350; trail stops at Rs. 1,250. Risk: Margin erosion from EPC mix, execution delays. Reward: Order execution, international thrust, policy tailwinds in water infra.