Va Tech Wabag shares plunge 11% after Saudi order cancellation
Va Tech Wabag tumbled more than 11% on Wednesday after the company announced the cancellation of a ₹2,700 crore order for a 300 MLD mega seawater desalination plant from the Saudi Water Authority (SWA). The stock, which fell as much as 20% intraday, closed at ₹1,672.95 apiece on the BSE.
Despite the setback, analysts view the correction as a buying opportunity, citing the company's strong order book of ₹11,900 crore and robust long-term growth prospects.
«For a desalination project, the first year of execution typically accounts for 10-12% of revenue. The SWA project was a complete EPC with a net profit margin of 10-11%. As a result, the cancellation is expected to impact FY26 estimated profits by 8.1%,» said Dheeraj Ram, an analyst at Ashika Institutional Equity Research. «The stock is currently trading at 35 times its FY26 estimated earnings, and the price correction presents a compelling opportunity to accumulate the stock.»
Shares of Va Tech Wabag have gained 49% in the past six months, outperforming the Nifty's 3% rise in the same period.
In an exchange filing on Tuesday, the company said, «With reference to the intimation dated September 6, 2024, regarding the 300 MLD Mega Sea Water Desalination Plant order in Saudi Arabia, we inform you that the customer notified all tender participants on December 16, 2024, that the tender stands cancelled due to their internal administrative procedures.»
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