VA Tech Wabag Secures ₹360 Crore Orders from GAIL & IOCL; Stock Gains Over 2%
VA Tech Wabag, a prominent player in the water technology sector, has recently secured significant contracts totaling approximately ₹360 crore from GAIL (India) Limited and Indian Oil Corporation Limited (IOCL). This development has positively impacted the company’s stock performance, reflecting investor confidence in its growth trajectory.
GAIL Contract Details
The major portion of this new business comes from a ₹340 crore contract with GAIL for the Design, Build, and Operate (DBO) of several advanced water treatment facilities at GAIL’s integrated petrochemical complex in Pata, Uttar Pradesh. The project encompasses:
- A 450 cubic meters per hour Ultrafiltration (UF) and Reverse Osmosis (RO) based Effluent Recycle Plant.
- An Evaporator-based Zero Liquid Discharge (ZLD) Plant.
- A new Waste Water Treatment Plant and the augmentation of the existing one.
The Engineering, Procurement, and Construction (EPC) phase is slated for completion within 24 months, followed by six months of Operation and Maintenance (O&M). The recycled water from these facilities will be utilized as cooling tower makeup water, enhancing the sustainability of GAIL’s operations.
IOCL Contract Details
In addition to the GAIL project, VA Tech Wabag has secured a ₹20 crore contract from IOCL for the O&M of the Tertiary Treatment Reverse Osmosis (TTRO) Plant at IOCL’s Panipat Refinery in Haryana. Notably, Wabag has been managing the operations of this plant since its commissioning in 2006, underscoring a longstanding relationship with IOCL. This three-year extension highlights Wabag’s expertise and reliability in industrial water treatment solutions.
Impact on Stock Performance
Following the announcement of these contracts, VA Tech Wabag’s share price experienced an uptick of over 2% on March 13, 2025, reaching ₹1,355.35 per share on the BSE. This positive movement reflects investor optimism regarding the company’s ability to secure and execute substantial projects in the industrial water treatment sector.
Rekha Jhunjhunwala’s Stake
Renowned investor Rekha Jhunjhunwala holds a significant stake in VA Tech Wabag, owning 50,00,000 equity shares, which represents an 8.04% stake as per the December 2024 quarter shareholding pattern. This substantial investment underscores confidence in the company’s strategic direction and growth prospects.
Financial Performance and Ratios
VA Tech Wabag’s financial performance over recent years showcases its operational capabilities and market position. Below is a summary of key financial ratios:
| Financial Metric | FY2022 | FY2023 |
|---|---|---|
| Operating Profit Margin (%) | 7.8 | 1.3 |
| Net Profit Margin (%) | 4.4 | 0.4 |
| Return on Equity (ROE) (%) | 8.6 | 0.7 |
| Return on Capital Employed (%) | 15.7 | 5.1 |
| Return on Assets (ROA) (%) | 5.5 | 1.9 |
Source: Equitymaster
The decline in these financial metrics from FY2022 to FY2023 indicates challenges in maintaining profitability and returns. However, the company’s ability to secure substantial contracts suggests potential for future financial improvement.
Company Overview
VA Tech Wabag specializes in water treatment solutions, offering services such as:
- Drinking water treatment.
- Industrial water and wastewater treatment.
- Desalination of sea and brackish water.
- Sludge treatment and recycling.
With over 125 intellectual property rights and dedicated research and development centers in Europe and India, the company has executed more than 6,500 municipal and industrial projects since its inception in 1924.
Recent Major Projects
Beyond the contracts with GAIL and IOCL, VA Tech Wabag has been active in securing significant international projects. Notably, the company bagged an order worth ₹2,700 crore from Saudi Arabia for setting up a mega sea water desalination plant. This 300 million liters per day plant aligns with Saudi Vision 2030 and is expected to be completed in 30 months.
Conclusion
VA Tech Wabag’s recent contract acquisitions from GAIL and IOCL reinforce its position as a leader in the water technology sector. While recent financial metrics indicate challenges, the company’s robust order book and strategic projects, both domestically and internationally, provide a foundation for potential growth and improved financial performance in the coming years.
Q&A Section
Q1: What recent contracts has VA Tech Wabag secured?
A1: VA Tech Wabag has secured contracts totaling approximately ₹360 crore from GAIL and IOCL. The GAIL contract, valued at ₹340 crore, involves designing, building, and operating advanced water treatment facilities at GAIL’s petrochemical complex in Pata, Uttar Pradesh. The IOCL contract, worth ₹20 crore, is for the operation and maintenance of the TTRO Plant at IOCL’s Panipat Refinery in Haryana.
Q2: How did these contracts impact VA Tech Wabag’s stock performance?
A2: Following the announcement of these contracts, VA Tech Wabag’s share price rose by over 2% on March 13, 2025, reaching ₹1,355.35 per share on the BSE, indicating positive investor sentiment.
Q3: What is Rekha Jhunjhunwala’s involvement with VA Tech Wabag?
A3: Rekha Jhunjhunwala holds 50,00,
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.