VA Tech Wabag Limited (WABAG) Q3 2026 Earnings Call Transcript

Good evening, and welcome, everyone, to this earnings call, post-announcement of Q3 and 9-month FY26 results of the A-Tech, Vagvak Limited. On the call, today from the management team, we have Mr. Shailesh Kumar, CEO, India Cluster, and Mr. Skanda Prasad Siddharaman, Group Chief Financial Officer. Kindly note that during this call, the company may make certain forward-looking statements concerning the business prospectus and profitability, which may be subject to risk and authorities, and the actual results could materially differ from those in such forward-looking statements. The conference calls will be archived and transcripts will be made available on the company's website. The company results update presentation has been uploaded on the website and stock exchanges, which provide an overview about the company's core offering and analysis of the results for this period. We trust that you had an opportunity to look through the sales. I will now request Mr. Shailesh Kumar to take you through the key business highlights. Over to you, sir.

Thank you. Good evening, ladies and gentlemen. A warm welcome to you all to the earnings call following the announcement of Q3 and nine-month FY26 results of VATEC VAWA Limited. We sincerely appreciate your continued trust and support. It remains invaluable to our growth journey. Joining me today is Mr. Skanda Prasad Sitaraman, our group's CFO. We are pleased to report another period of profitable growth during the fiscal year, driven by disciplined project execution, strong operational delivery, continued progress on our strategic priorities. Despite a one-time statutory impact due to the implementation of new labor codes, our bottom line grew by 24% year-on-year. EBITDA increased by 20% year-on-year, while we maintained our EBITDA margin at 13.7% well within the guidance range. Revenue growth remained healthy at over 18%, fully in line with our medium-term guidance and supported by robust execution across our project portfolio. We remained firmly focused on profitable growth while preserving balance sheet strength. During the period, we further strengthened our balance sheet. Through debt reduction and continue to remain net cash positive for the 12th consecutive quarter, closing with over Rs. 1,000 crores of cash balance, a milestone moment in our group's history. Our focused efforts to expand on the international front are yielding tangible results. With international projects contributing 50 percent of revenues for the fiscal year to date, underscoring VAWA's growing global presence, and in line with our strategy to continually increase our global footprint. We will continue to strengthen our leadership in the Middle East region, which is emerging as our next key growth engine. While expanding our footprint in CIS and Southeast Asia regions that offer strong opportunities in water treatment. At the same time, VAWAG remains firmly focused on further consolidating its market leadership in India. Our order book continues to expand with strategic And currently stands at over Rs.163 billion. It remains well balanced with 64% EPC and 36% O&M projects, providing strong revenue visibility and deeper client relationships. International projects account for nearly 50% of order books, supporting margin improvement, cash flow, and reinforcing our global footprint. Let me now briefly update you on some of our key ongoing projects. The JICA-funded 400 MLD Peru desalination plant in Chennai is progressing as planned with remaining marine works nearing completion by the next quarter, steady involvement in civil construction, ski equipment deliveries in progress, and plant piping and prefabrication underway, keeping the project on schedule. The World Bank and AIIB funded 200 MLB Pagla project in Bangladesh has picked up pace with pile casting and drilling activities progressing satisfactorily. The World Bank funded wastewater treatment plants project for the Bangalore Water Supply and Suez Board is gaining traction with site activities initiated and subcontractors mobilized. The breakthrough Renewsys solar cell manufacturing facility order covering ultra-pure water, effluent treatment, and ZLD system is on schedule with engineering completed, key equipment ordering nearing completion, supplies commenced, and installation set to begin upon trying to handover of the civil front. In the Middle East and Africa region, 200 MLD al-hire STP project in Saudi Arabia is moving swiftly on all fronts, and project activities are in full swing. In the 300 MLD Yanbu Mega Desalination Plant in Saudi Arabia, while the effective date of commencement is expected soon, early works like basic engineering is largely ready, key personnel have been deployed, and procurement activities of long-lead items are underway. The EIV and KFW Germany funded Lusaka. Sanitation project in Jambia is progressing on track, with procurement activities for critical equipment advancing well, and civil subcontractors mobilize at sight. We are also pleased to share that the Ghaziabad Nagar Nigam HAM project has achieved final COD on 1 January 2026, and the operations are in full flow. Trending momentum in India continues to gain pace across municipal and industrial water segments, supported by diversified EPC, DBU, and selective PPP pipelines that leverages our execution and ONN expertise. The Middle East presents sustained opportunities in desalination, wastewater treatment, and reuse. Backed by strong infrastructure investments across the GCC and our disciplined bidding approach. In Africa, multilateral and government-backed projects focused on water and sanitation are expected to drive steady medium-term growth, with Southeast Asia offers diversification through active tendering driven by urbanization and stricter environmental norms. Additionally, our Europe cluster is witnessing improved bedding activity recently, particularly in high technology and complex water treatment opportunities across eastern and western Europe, which we will pursue without losing sight of our strategic priorities. Looking ahead, we continue to be well-positioned in orders over... Indian rupee 3,000 crores and also witnessed a strong order in flow visibility across our key geographies, supported by a healthy order pipeline and strong alignments with our core capabilities. This gives us confidence in our ability to sustain profitable growth while remaining discipline on risk, capital allocation, and returns in line with our medium-term strategy. Before I conclude, I'd like to thank all our stakeholders for their continued confidence in Gavar and for supporting our mission to deliver sustainable water and environmental solutions globally. With that, I will now hand over to Skandar to take you through the financial performance.

Thank you, Shailesh, and good evening to everyone on the call. I trust you have reviewed the financial results and investor presentation already shared on our website and filed with the stock exchanges. I will briefly walk you through the financial performance for the nine months ended December 2025. Over the first nine months of the fiscal year, the company has delivered a strong and consistent financial performance. Continuing on its path of profitable growth while maintaining margin discipline and balance sheet strength. Importantly, our performance remains fully aligned with the medium-term outlook that we have shared with all the stakeholders. For the period, consolidated revenue stood at rupees 2530 crores. Reflecting year-on-year growth of over 18%. This growth was driven by steady execution across projects, with newer and larger projects progressively ramping up during the year. Our business mix Continues to evolve favorably, and the O&M segment delivered a strong performance, contributing 18% of total revenues, while international operations accounted for 50% of the revenues, further reinforcing Vabag's global leadership in water technology solutions. On profitability, consolidated EBITDA for the 9-month period stood at Rs. 347 crores, translating into an EBITDA margin of 13.7%, which is well within our medium-term guided range of 13-15%. Consolidated profit after tax stood at Rs. 242 crores. Representing a margin of about 10% and year-on-year growth of 24%. In the first nine months, interest income exceeded interest costs, reflecting strong operational cash flows, efficient working capital management, and disciplined treasury practices, while reinforcing our focus on maintaining a healthy balance sheet to support growth and execution. For the period, the revenue, EBITDA, and PAC on standalone basis stood at Rs. 2,118 crore, Rs. 306 crore, and Rs. 212 crores, respectively. Our long-term financial trajectory remains encouraging. Over the past five years, consolidated EBITDA has grown at a kegger of 19%, while PAT has grown at a kegger of 30%. This reflects sustained value creation driven by disciplined execution, a high-quality order book, increasing contribution from O&M and international projects. And a continued focus on efficient cash and capital management. Turning to the balance sheet, our net financial position, sorry, our financial position continues to strengthen consistently. Net current working capital days improved significantly to 101 days for the nine-month period driven by tighter receivables management. Continued improvement in billing discipline and a sustained client engagement. This structural improvement in cash conversion has enhanced liquidity, supported operational flexibility, and enabled us to maintain a net cash positive position for the 12th consecutive quarter, reinforcing the resilience and quality of our balance sheet. As of December 2025, our gross cash position stood at rupees 1,080 crores, while net cash stood at rupees 891 crores. Excluding the transient debt under our HAM entity, net cash stood at over 1,000 crores, a historic high for the group, reinforcing the strength of our balance sheet and capital discipline. Alongside this, we have continued to reduce debt levels year after year through prudent financial management. With the continued expansion of our international business, we have onboarded two additional international banks across the Middle East and Africa region to support the increasing requirements for both funded and non-funded facilities. This diversification strengthens our banking relationships, enhances financial flexibility, and improves our ability to support project execution across geographies. In parallel, we have actively initiated the use of insurance bonds as a substitute for traditional bank guarantees, enabling cost optimization, while also enhancing our non-funded limits. This approach supports more efficient capital utilization and strengthens our overall liquidity management framework as we scale our operations globally. We are pleased to share that our credit rating has been reaffirmed at AA- table, reflecting the sustained strength and consistency of our financial and operational performance. Our robust credit profile is underpinned by Healthy Rosé, a strategically diversified order mix across EPC and O&M segments, and strong revenue visibility. Our continued focus on high-technology, engineering-led projects, and expansion into new geographies further enhances our growth prospects. Additionally, majority of our projects is supported by multilateral funding agencies, sovereign counterparties, or letters of credit ensuring strong payment security, mitigating receivable risks, and reinforcing business resilience. Importantly, our credit rating has improved sequentially over the past five years, translating into progressively lower costs for both funded and non-funded facilities and strengthening our overall financial efficiency. Staying true to our asset-like business model, we continue to generate healthy returns. For the period, return on capital employed stood at approximately 19% and return on equity over 15%, reaffirming our commitment to sustainable and capital efficient growth. Our financial discipline and balance sheet strength have also been recognized by the rating agency with India Rating and Research reaffirming our credit profile during the year. With a strong order pipeline, a resilient balance sheet, and consistent execution capabilities, we believe the company is very well positioned to sustain its growth momentum while remaining firmly aligned with its medium-term guidance. Anchored by our Vridhi strategy, our focus remains on profitable growth. Maintaining a net cash positive position and creating long term value for all stakeholders. In closing, I would like to thank our bankers, investors, customers, vendors, subcontractors, partners, and most importantly, our Vabagites for their continued trust and support. With this, we will open the floor for the interactive question and answer session. Over to the moderator.

Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask the question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Ladies and gentlemen, in order to ensure that management is able to address questions from the participant in this conference call, please limit your questions to two per participant, and you should have a follow-up question. Please rejoin the queue. The first question is from the line of Kishore Kumar from Unifi Capital. Please go ahead.

Yeah, thanks for the opportunity, and congrats on the good side of the number, sir. Sir, my first question is on the... The big pipeline, particularly in the domestic market, because if I look at the closing order book for the past four, five quarters, the growth in the order book is slightly given by the international projects, while the domestic order book remained more or less flat at similarities. Also, the Q3 domestic market execution is actually declined. Just wanted to get your sense on this and how do you look at the big pipeline aspect.

Thanks, Kishore, for the question. As far as the India water backlog is concerned, we have a healthy position as of now, and going forward, as I told earlier, we have a Many of the prospects, almost on the verge of conclusion, and as I told you, 3,000 crores of order is already in visibility. As far as pipeline is concerned, we see a very strong pipeline. Some of them have only got effort, which is going beyond this quarter, but early next year, we see many of those prospects converting. And when I say that, it's a mix of... Government, private investment, municipal bodies. So, there is a diversified portfolio which is there in front of us, and those are looking at many of those conversions will be happening in near future. Got it.

And any update that you can give us on that investment platform that is in progress with the Norwegian Fund? Any status update on that?

Be sure the due diligence is largely over, and we are right now in the process of negotiating the definitive agreements. So, in the next couple of months, we are hopeful subject to, of course, the, you know, the multilateral funds or the large funds will have their own. Internal investment committees, board procedures. So we feel that it is only a couple of months away in terms of the agreements being finalized. And then, of course, they'll have to put it to their boards and get the formal approval after which we can. So right now, it's only a few months away.

Okay, so there's one clarification on the other expenses in Q3. Is there any one-off thing that is accounted like provisioning?

There is no one-off issue. You know, there is an ECL policy matrix that we follow here in Babar, and every two to three years, we will obviously have to restate the policy in line with the recent mix. So, there are few cases where we, or rather it's more a matrix provision that is driven by the formulae in the policy. Other than that, there is no one-off. It's a standard other expenses otherwise.

Got it, sir. Thank you so much. I'll join the team for further questions. Thank you.

Thank you. The next question is from the line of Nidisha from ICIC Securities. Please go ahead.

Yes, thank you so much for taking my question. So, my first question is on how many bids are we preferred bidder in, and where are these bids? Are they internationally with domestic bids? Can you tell us a little more about this?

Sorry, Nidhi. We heard you asked how many bids are we preferred bidder in, and what was the second part of the question, please?

Where are these, are these international based, domestic, and if they are international, then what are the geographies?

Yeah. So these are, these are largely jobs in the Middle East geography and, and in India. This would be about 2 to 3 major jobs. Of course, there are smaller jobs, but it spreads over 2 to 3 major jobs where we know that we are well positioned, either announced as a preferred bidder or we know we are the L1. So, it is a mix of India and international jobs.

All right. My second question is on Indosol. What is the progress on Indosol as we started procurement over there?

Indosol project engineering has quite matured, and we have started scouting for potential suppliers that we have gone in the market. The customer is finalizing the plot where it would be setting up the plant. That is what is somewhat taking some time, but now they are saying recently what we have heard from them, they are almost on the verge of Finalizing the layout and the plot. So we have restarted contacting our suppliers to that effect so that deliveries happen on time. So progress in overall, progressing well, and in coming days, it is going to gain further momentum on this.

All right. My last question will be on the HADA ISTP plan that you mentioned that you have preferred bidder in. Do we expect the awarding to happen in FY26?

For fingers crossed, we would also hope the awarding is closed. You know, this is a job where we are a preferred EPC partner to the developer who is a preferred bidder player. Obviously, in development jobs, there are additional conditions, decisions, financial closures, which happen at the developer's end. We are also following this up. We have already started – I mean, we are working with them in terms of supporting them on the activities for the conversion of the job. So it is in progress. Yeah, fingers crossed, possible that it could happen this year, but it's only a matter of time.

Thank you for my talk and my question.

Thank you.

Thank you. The next question is from the line of Aadarsh Singh from ASK Wealth Advisors. Please go ahead.

For Copan Audible? Yes.

Yes, sir, please proceed.

Yeah, yeah, thank you for the opportunity. Given that our revenues, I know 50% of our revenues come from international and roughly similar in terms of order books, I just wanted to ask what is the execution time, margin, and the working capital for international orders without these Indian orders?

See, generally, international orders are a little faster than the Indian orders. On a broad basis, you could take about two and a half to three years as the general timeline for a large EPC project. Of course, it depends project by project, what scope it is, what kind of project it is, size of the project will determine the timeline. In terms of working capital, of course, the international mix brings a lot of advantage to the working capital because the cycle times of collections are better, especially in the Middle East and African geographies. It's from the the US. That's one of the countries, of course, sovereign counterparties and Africa multilaterals and that's one of the cornerstones of a strategy where we said we will go more international, where there is a higher appreciation for water and projects are larger better in terms of cash flows. And at And at our threshold margins and references are good. In capital perspective, and cash flow perspective, Thank you so much.

Thank you, Adesh.

Thank you. The next question is from the line of Shahzad Shrokh from D-Meter Advisors. Please go ahead.

Yeah, thank you for the opportunity. I had one question. Sir, how do you see the project pipeline shaping up in the international business, especially in the Middle East GCC side? The reason I ask this is oil prices have been soft in the past one year, and this could have capex implications for these GCC governments. So, do you see any slowdown in projects getting added to the pipeline, or any slowdown in conversion of projects already in the pipeline, say, one year back versus today?

Shazad, the geographies that we work in, whether it is Middle East or Africa, For them, water treatment is not an option. It cannot be dependent on whether the oil prices go up, come down. That may give them a fillip to do more, but they will have to still do the basic water treatment that is required. And even for the oil and gas, obviously, you know that water treatment forms an integral part. So, we have generally not seen, quote, unquote, any slowdown, as you mentioned. Jobs are good. You have seen in the last, exactly the last 12 to 18 months, we have secured all these large market jobs. As we said, we also announced this preferred bidder, preferred ETC contractor status in the HADA project. We are a preferred bidder in over 3,000 crores worth of projects, which also includes projects in the Middle East. And also, the way to look at it is, it's not only Middle East, our geographies are around Middle East, Southeast Asia, the rest of the India cluster like Nepal, Bangladesh, as well as the African continent. So, we have a diverse set of regions over which we acquire business. So there is one, fundamentally water will not go out of work. And second, our geographical diversity in terms of business helps us keep getting business despite any of these challenges. And third, of course, the kind of projects we pick, multilaterally funded, sovereign backed, LC backed, allows us to get larger projects with good payment security and insulates us fairly from any of these risks.

Fair enough, sir. I agree that from a long-term point of view, that there is no other option for Mindy, but my question was mainly more from the short-term point of view, which also you say that there is no slowdown, even in the near term.

That's right, Shurda.

Okay, sir. Thank you.

Thank you. The next question is from the line of Aniket Jain from Yes Securities. Please go ahead.

Good evening, sir. I hope you can hear me. So, actually, I had one question. So, you mentioned about the European clusters, and we are exploring some more opportunities there. So, could you provide some more color on the opportunity that can come in the European cluster, and are those more of UPW? Would there be more of traditional water treatment opportunities and how is the margin profile Because I was under the impression that since these are quite mature regions, so the margins could be slightly lower than what we are seeing in Middle East. So that is my question.

So, Arikit, I mean if you. You heard Shailesh when he mentioned that we are seeing these opportunities, but we will not lose sight of our strategic priorities when we pursue these opportunities. The region is mature, but yes, all mature regions also go through a cycle of infrastructure saturation, and they will have to come back to order it. Yes, we are seeing high technology and complex jobs that are coming out. We are very selective in this cluster in terms of the jobs that we will pick. We will continue to maintain our financial prudence and put it through all the parameters that we are looking for in jobs, in other geographies that we are in, and be rest assured that our margins will not be lower than what we have been guiding. The market. And of course, Europe, you know, we took a strategic call to exit from Europe in terms of entities. And at that time, we said this is a market which is a technology hub for us. We will remain there, look at what is there for the offering. But again, it will be in line with our strategic priorities, I repeat.

Understood, sir. That was my question. Thank you so much for the answer.

Thank you.

Thank you. The next question is from the line of Tanmay Chaudhary from Benitura Securities. Please go ahead.

Yeah, hi sir. Thank you for the opportunity and congrats for the good set of numbers. My first question is, as I can see, the order intake this quarter was around 1200 crore. So can you just give me like what is the breakup on the geographical side and on the order type?

So, this quarter, we received an order from BPCN, which is a large order for RODM, RWTP, and ZLD. That is, that's one of the major orders that we received, and the other one was from Nepal, which also is, if I remember right, a large order. Those are the two large orders, but we can tabulate and tell you. And in Middle East, we got a brackish water reverse osmosis order at Alju. Again, that is also a large order. So these are the three big orders. Apart from that, of course, we do receive orders below the threshold, which

are also accounted.

These are the three major orders out of the planet.

Got it, sir. And, sir, like, what do you see, where do you see the order inflow over the near term? Like, I would appreciate, like, if we can give any range, like, it would remain in the same range of 6,000-odd crores and maybe more than that, given the good traction from the MEA market.

See, Tanmay, we've taken a conscious call of giving medium-term outlooks because we are a multi-annual project company. So, I mean, we don't necessarily look at it from a quarter perspective, we look at it multi-annually, and that is why we said one of our medium-term outlook guidances is keeping the order book level to revenue at over 3x. So, that's comfortably there. Even today, we have more than 4x. Even just taking the EPC, we would be comfortably in the 3x range. So, our aim will continue to retain the levels at these and keep improving on this. And of course, I'll leave the math to you, but I don't, we've stopped giving these short-term guidances because it's not an annual company that we are running. You have to look at it multi-annually.

Fair enough, sir. And, sir, like, going on the future energy solutions, so are we seeing any traction or tender participation in specifically data center and solar manufacturing? Especially after the government push. So, can you just throw some light on it?

Yeah, so, as you know, I was talking that Renews is solar. That is a solar manufacturing plant. We are supplying the ultra-pure water, and that project is already on. So, that demonstrates our capability to address this new energy sector. We are, many of the hydrogen developers are also in touch with us, and we are connected with them for their prospects. Even in Hyderabad, which has been recently announced, we are in bidding process with them. We are there in all those energies, from new energy to be precise, even In terms of compressed biogas, we had recently bagged one order, and we are developing that project for one of the municipal bodies, and that is also a sector in which we have started working, that is a new energy sector. Another part, data centers, yes, they have a huge water requirement. We are connected with some of those prospective developers or who are developing them. The water requirement is high, and we are ensuring that those solutions are cost-effective for them. The water reuse potential is very high, which is our huge strength area, and we are unparalleled there in water reuse. So, those are helping us in reaching to them and finding a cost-effective solution for our customers, and that is where our expertise is there if we are leveraging to connect with them.

Got it, sir. And, sir, just one last question. When we can expect the, you know, GNN HEM project budget borrowing to get excluded from our books of account?

Our aim is to do it by the year end. Of course, as I said, we are at a very mature stage. We should be done with most of the activities subject to the timelines of the investors, investment committee and board approving. I think it's fair to target this year. But of course, as I said, it is subject to their investment committee timelines. Again, I will just for the sake of clarity, I will repeat. The diligence is done. The agreements are under advanced stage of closure. So, what is left is only the administrative part largely, and we should be able to close it very quickly.

Got it, sir. Thank you so much. That's all for my time. Wish you luck. Thank you.

Thank you. The next question is from the line of Vilay Rai from Kaam Kya Wealth Management. Please go ahead.

I thank you for the opportunity and congratulations on the great set of numbers. Sir, can you elaborate on what is the scope of new business of ultra-pure water for the life of data centers and semiconductors? Have you seen some order booking in this segment and how big this can be in the years to come?

I was saying about it, ultra-pure water for solar manufacturing for hydrogen is a requirement, and as I said, we are already delivering a project on ultra-pure water, and project is on advanced stage. That makes us eligible or ready for bagging or working on all these new prospects. Ultra-fuel water is coming for semiconductor manufacturing, then for solar manufacturing, solar panel manufacturing. So there, we are already there. We are talking to many of those semiconductor manufacturers. As far as hydrogen is concerned, there also we have all the wherewithal and capability. Only those projects have to be made commercially viable in terms of hydrogen as such as a sector. You must have known that it is coming very close to that viability. And from that point of view, some of the people have... We have already signed the off-take agreement and are talking to us, and we are in advance stage, and that gives us not only ultra-fail. That also gives the opportunity for desalination corresponding to those requirements because they have a huge requirement. Sometimes we are also giving solutions in terms of reuse for making it up. So in combination, we are using various technologies to address this requirement, and many of those developers are very much in touch with us because they see their strength what we have.

Thank you. And so going forward, what do you think, how much would the international project be as a percentage of revenue? Would an order book, would it shift to a higher level of 60-40? Are you comfortable with the 50-50 levels as of now?

See, we are at about 50% right now, and we have already stated that we want to keep expanding globally and look at improving our international business while continuing to remain a market leader in India. So, as we move forward, we expect that the trend would be more. On international, we'd increase the international business. We are happy increasing that because, one, they are good on margins, they are good on cash flow, they are good on working capital. So it only helps us improve our numbers. And we hope in the next few years, India will also grow along with that. And both engines firing will help us deliver very good results.

And then the international votes will be predominantly from the Middle East geography, right?

No, no. Middle East is one of the geographies. We have Africa. We are also looking at CIS. We are looking at South Asia and Southeast Asia, all of these, while Middle East and Africa will lead the pack, but it is not necessarily dependent only on Middle East and Africa. From an international perspective, we are spread across all the emerging markets, whether it is Middle East, Africa, CIS, Southeast Asia, and South Asia.

Sure, sir. Thanks a lot.

Thank you.

Thank you. The next question is from the line of Praveen from Trade Genie Financials. Please go ahead.

Good afternoon. Thank you for the opportunity, and congratulations on the strong quarter. Since most of the participants have asked the questions that I had, I just have a couple of questions. Thank you. And thank you. Pretty good. There's a lot of significant improvement. What do you think is a sustainable level that you're targeting?

We focus more on net cash positive, Praveen. Working capital is a... Thank you very much. But we are happy with the continuous improvement. You have seen us move from a net cash position of 100 crores about five years back to 1,000 crores today. And that also reflects on the quality of the projects and quality of our customers. Okay.

One more last question, sir. Like, now most of the government tenders are L1 driven, right? How to balance willing to orders and also maintain our EBITDA of 13 to 15 percent?

See, it's never been different. And what we should understand is as the sector has matured, it is not limited to a L1. It is a T1 plus L1. So, parties who are technically qualified and technically best move to the ground of price. So, slowly customers are looking at value over merely price, though a large amount of government contracts. It is understandably run on L1 because of the procurement policies. At the end of the day, it is about the competition that you have. And what are the kind of projects we pursue? We are focused on high technology desalination, reuse, industrial water projects, and complex wastewater treatment plants. The competition is very limited. Competition is international, and Wabag will stand out on all counts when it comes to that. Whether it comes to technology, we are second to none. We have our delivery centers at the most competitive geographies, and we have 100 years of experience. So we are confident, and we have also proved in the past that we are able to deliver this value. The 13 to 15 percent, again, is not a number that we merely stated. We have delivered it for more than two years. Now, we have consistently maintained it, and despite all the commodity price changes that you are seeing, even amidst these vagaries, we are delivering these kind of margins that we promised. So, this is also something that reflects from the contracting that we do, the kind of projects that we pick. So, this gives us confidence that we will maintain it at the 13 to 15 percent.

Thank you, sir. That makes sense. Thank you. Thank you very much.

Thank you. The next question is from the line of Deemant Shah from ITI, AMC Limited. Please go ahead.

Yeah, hi. Hello. Hi, hi, Deemant. Good afternoon. Good afternoon. Just a quick one. I mean, apart from the good order book that we carry, Can you also enumerate what are the new sectors emerging and Where would be, can we see pollution very shortly in any of these new areas that we were targeting?

One of the areas where we are seeing definitely desalination is the one which is feeding to all the new energy sectors, which are all new of the new sectors, which it will be feeding to. Further, as I have been saying, Solar manufacturing is picking up the country in terms of new sector, and there many people are contacting us, and we are in touch with them. And we are almost on the verge of concluding in terms of pipeline that I was talking about on those solar manufacturing panels. In terms of hydrogen. We see there are clusters where hydrogen prospects and developers have started going into advanced days, and that is what is also demanding water, and we see that some of those, we are, to be precise, one of the prospects is in advanced days in terms of hydrogen. Bio-CNG, we have been talking about it, and we have had success. We see many other prospects there in different states in the bio-CNG sector also. You would have seen that we are also... Promoting some of the technological solutions to these new energy sectors through our Blue Seed investment. There are many technological partners across the nation and across the globe with whom we are connected and they are connecting. We are reinforcing their technology, their offering to us, and that is helping us to be competitive with those new sectors. So, and last, which has been our strength, is reuse for all these sectors. Reuse is one of the areas where government is focusing, many of the private developers are focusing, their stereotype requirement in terms of traditional business requirement or for new energy. So, that is also a component which is helping us in connecting with them. So, in overall, in all these sectors, we are there, and some of those prospects are almost on the verge of conversion.

Nothing from the semiconductor side. I thought even that would be sort of at an advanced stage, with almost four or five factories likely to see fruition very shortly.

Semiconductor. Probably you would have seen the sector as it is moving. There are two components of it. One is assembly, and second is fabrication. So fabrication is some of those possibilities which were there. Those had earlier initial startup which happened or to be initial... Setup which was there, that is somewhat maturing and newer ones are looking at in other geographies beyond India. So, we would be connected with them. In India, now, mostly it is assembly part, which has a lesser of water requirement. Nonetheless, for them also, we are connected, but we are seeing that semiconductor manufacturing in other geographies, others in India also, while some of those plants which are there, that is taking some time, but we are tracking that sector very well. And in Singapore and other locations, also we are connected with these semiconductors where there can be a possibility.

Great. Second question would be, sir, you know, between the desalination and the ETP-STP, do we have some mix in the current autobook that you can, you know, disclose?

We have given in our investor presentation the mix of various segments. Desalination is definitely one of them, but to be a specific number, we can probably later send to you. What we see, we have a good component of desalination with respect to other sectors, water treatment and treatment. But going further, we see that the decadination component is going to further grow beyond what we have. And there is a lot of prospects we are working on.

So would it be very broad brush, would it be 40, 30, 30 kind of, between O&M, ETP, STP, and the… The larger component of desalination, which would be residing close to 40% in the existing order book.

So, Devan, we can look at these numbers specifically. Of course, it moves...

Oh, just a broad brush. It need not be supremely to the last decimal.

I think about one-third would certainly be desalination, because if you see our top ten order book... Three of them is desalination. In fact, in the top five, three is desalination. About one-third is our O&M, as you rightly said. In the 16,000 crores, about 4,000 to 5,000 crores is O&M. And then again, you will see that we have industrial jobs, which will be TP, UPW, RODM, ZLD, all of those. And what is balance would be about 20-25% would be SPP. That's the broad estimate I can give. Excellent.

So, which means that, you know, we should be seeing the higher range of your margin very shortly. Directionally, you can say yes or no, because given that… You know, the larger O&M contracts are yet to rectify very soon, or possibly will be a larger portion of our executable order book. That should be a very strong tailwind for our margins and going forward. Is that observation correct?

Certainly, as part of our strategy, we want to keep improving our O&M days. You are right on that aspect. At the same time, we also want to keep increasing our international presence. So, directionally, you are right. That is the guidance we have given of 13% to 15% in terms of EBITDA. And, of course, God willing, inshallah, we should move in that direction. We don't, we don't see a reason why the margins will not move up with the volumes and with the better prospects that we see.

And lastly, if I may, are we formalizing some dividend policy given now we can be amenable to a reasonable distribution?

We have an internal guideline, but of course, yes, in terms of a policy, we will certainly consult with the board if they want to make changes to the current level of dividend that we have restarted last year. We will certainly consult with the board if they want to make changes to that going forward.

And in summation, next, medium to small term, we can grow at 15% plus. That would be a fair assumption.

We have given a medium term guidance of 15 to 20%. 20%. And we are confident that that is something we will be at.

Super. Many thanks for answering all these questions. I really appreciate it. Thank you.

Thank you. A request to all participants to please remit your question to two per participant. If you have a follow-up question, please rejoin the queue again. Thank you. The next question is from the line of Suyesh Bhave from Wealth Guardian. Please go ahead.

Yeah, thank you for the opportunity. Sir, regarding the 1000 code net cash balance, now that constitutes a pretty big chunk of our network as well. What are the plans for the utilization of the same?

Thank you. We also stated in the past we are an asset light organization. We'd like to put the cash to the best use. One is, of course, we will need cash for the projects to keep churning, and that will give us – this kind of cash balance gives us advantage to be negotiating stronger in terms of our procurements. Number two, the municipal platform will require some amount of cash. We will take a minority interest in order to pursue PPP opportunities. The third is, of course, distribution to the shareholders. You have seen if we started dividend. That is one aspect. So, broadly, this would be the use. We are hardly taking any debt today. The cash generated by the business is sufficient to run the business as well as provide us surplus cash, which we require. And I think contextually, we are an EPC organization. So cash on the balance sheet is also an important factor when it comes to kind of having strength in terms of bidding and negotiating. We also need this for bidding for larger jobs. So broadly, this will be the use, and we will remain a satellite even as we move forward.

Understood. So my next question is, in our O&M business, we have almost around 5,500 crores of order book in O&M, predominantly which is municipal. Can you throw some light on what is the margin differential between municipal O&M and industrial O&M, and what are the factors which drive those margins, if you can?

See, Suyash, we generally don't discuss margins at a segment or sector level, but broadly, most of our O&M is generally municipal because the industrial customers usually run their own plants, and obviously between an EPC and O&M, you know generally the O&M is far better than EPC, And that's one of the reasons why we want to improve the OLDM share. We generally don't look at margin at segment level from our discussion.

All right, all right, sir, no problem. I have just one more question. Sorry to interrupt, sir. Hello.

Sorry to interrupt, sir. Sir, we may request you to please rejoin the queue as the... All right, I'll rejoin the queue.

Yeah.

Thank you so much, sir. The next question is from the line of Kishore Kumar from Unifi Capital. Please go ahead.

Sure, thanks, Akit.

Sure.

On the closing order book position of around 7,800 close in the India position, can you give us how much proportion is municipal and how much is industrial within the domestic market?

So, it is there in the investor presentation, for sure.

I think India would… Sir, India, total is given, but within India, how much proportion would be attributable to municipal? One moment.

If we go to the order book analysis.

We can, we can check this and come back to you, be sure. Yeah, okay.

Got it, sir. Got it. That is fine, sir. Can you actually give us the cash flow from operations for Q3?

Sorry, I didn't get your question. Sorry, Kishore.

Can you give us the cash flow from operations for the current duty quarters?

For the nine months, of course, there is no cash flow reporting. For the nine months, roughly the free cash generation is about 300 crores.

Free cash after CapEx.

You just do it on the balance sheet.

It's about 300 crores of pre-cash. Yeah, of course, we hardly have any capex, Kishore. Oh, okay. I mean, 5-10 crores of depreciation is what we do. So, hardly any capex. Got it. Got it.

Thank you. Thank you so much. Thank you.

Thank you. The next question is from the line of Mihir from Prithvi, Finmart. Please go ahead.

Good evening, and thank you for the opportunity. As the company is targeting CIS and Southeast Asian countries for goals, are there any ongoing tenders where the company is a preferred or L1 bidder or any meaningful orders under evaluation from this region?

We are, as far as CIS is concerned, we are in the business development phase. As soon as we have any... If we have any strong L1s, we will surely come back to you. And, of course, on Southeast Asia, you know we have a running business. We are present in most of the countries in Southeast Asia. We are well, let's say, well placed in this geography to access. And, of course, I recollect CIS, we have about two to three prospects where we are working on at this point. And, as soon as the tenders are out, I think we will go ahead with the bidding. So, this is the status of both the regions.

Okay. Thank you. That's it.

Thank you. The next question is from the line of Shuyash Bhave from Wealth Guardian. Please go ahead.

Yeah, sir, on the EPC side, we have around 9,700 crores EPC book. Just to understand from a revenue recognition perspective, how does this flow into our P&L on a rough basis, say, in year one, how much percentage will flow, in year two, how much will flow, on a rough, broad basis, if you can help us understand.

It would be very difficult unless we go project by project, Suyash, but if you are looking at from a modeling perspective, I would say broadly linear, you can take it over a two and a half to three year period that these revenues will flow through to the P&L.

Okay, sir. All right. Understood. Thank you, sir.

Thank you.

The next question is from the line of Manish Maheshwari from Equity at Work Family Office. Please, go ahead.

Sir, thanks for taking my question. Sir, are we taking any green shots from Yamuna, Delhi Yamuna opportunity?

Yes, that is throwing a lot of opportunities. We are already working on those tenders. We have submitted a few of the bids, so many of them are yet to open, but that is definitely throwing opportunities. We know we are very much present in Delhi. We are already working on many of the EPC projects, which one of it we have recently completed, and we have two, three O&M sites which we are working on, which gives us some... Advantage to be knowing that geography, and we have worked with DJB previously and working with them. So, that is a definite prospect we are looking at, and we are confident that those pipelines, we are going to convert them.

Okay. So, what is the quantum or maybe quality of order that we are expected to get or obtain from Yamuna?

Quantum, I would refrain from giving you because it's a bidding process, though as you know we are... Very selective, and we are very judicious in our bidding that we are a technology company, and we maintain our margin position, and that's how we evaluate the risk. So the number I would not like to give you at this moment, because those are in pipeline, and conversion is somewhat in coming days, in coming weeks and months, it will be evolving. But we are fairly confident that we will be able to. Grab some of them, those prospects.

Sir, another question is on the rest of the world segment. Sir, there is about 28% quarter-on-quarter growth in terms of the top line, gross top line from the rest of the world, and about 57% year only. But the margins, I mean, the EBIT margins are only, have actually sort of only, I mean, the uptick is only about 40 basis points, both quarter-on-quarter and year-on-year. 26, about 20, sub 27%, and the previous quarter was about 26.25%, and same quarter, corresponding quarter, last year was also about 26.25%. So, I mean, the, I mean, the, the uptick is, uptick is only 40 bits, 40, 40, 45 bits, right. So, margin expansion is, is not, I mean, we are not seeing margin expansion here.

So, Manish, I think the numbers as is seen will not give you the story. You will have to understand the context of it. If you see the last year, we had two projects in the rest of the world which are EP. One was Senegal, one was Sibur. Both these projects, as you know, the EP projects are usually better in margin than the EPC projects, whereas EPC projects will give you volumes, though we have always said that construction is only a pass-through. In this year, the rest of the world, again, we have projects like Alhaya, we have projects like Zambia, which are contributing to the revenue. So it's also the mix of projects that you'll have to see. But I would probably encourage you to see the margin profile over a period of time to understand how international mix brings better margins instead of nearly comparing two periods which can be completely different in terms of mix-up projects. So this is the main difference. Other than that, you see that the international projects usually add better to margins and also when it is EPC add better to the volumes as well.

Thank you, sir. Sir, also, last question. What is the operating cash flow fee tax for the first nine months FY26 return?

I'll have to check this. I don't have a pre-tax, as I just told, if I remember right, Tishore. We have generated free cash of over 300 crores.

Free cash flow, you stated about 300 crores, right?

Yes, correct.

I was looking at a pre-tax, I mean, just the previous participant, you stated, I mean, 300 crores of free cash flow for the first, I mean, for the first three quarters put together, that is about, I mean, a nine-month F.Y. 30% so far, right? Pre-test, I was looking at the summer, yeah. So, I think lastly, broadly, you

will have to, let's say, I would say about add 30-40 crores to that. I can check this specifically. The current tax is about 73 crores. So, you just have to take that up. Because largely, it is driven by India, and in India, you know, you more or less pay the taxes that is approved.

Sure, sir. Thank you. Wish you luck for the future.

Thank you, sir. Thank you.

Thank you. The next question is from the line of Shantosh from SKKHUF. Please go ahead.

Good morning, everyone. Hello, Audible.

Yes, Santosh, but we are hearing some background. If you could come closer to the device and speak, you will be more audible.

Sure.

Better now? Yes, better now.

Hello.

Yes, Santosh, please go ahead.

Okay, so I have two questions. One is... I know with a comment, finance major said that there would be a huge allocation to the operational operations. So it's something... Santosh, your sound is...

You are not very... Santosh, sorry to interrupt.

Mr. Santosh. Mr. Santosh.

Mr. Santosh? Mr. Santosh?

As there is a lot of background noise. Hello?

Yeah, hello. Am I audible, madam?

Yes, you are audible. Okay. So, there is a lot of background noise. We are not able to hear you properly.

Let me try again. So, I am saying that the finance minister announced the 16th finance commission award to the municipal parties, and it turned out to be something like next five years, $39 billion would be given. So are you looking at this in terms of more opportunities from the market?

Yes, we are definitely tracking those investments which are going into these municipal bodies, and we are looking at the prospects which are getting there. You would be knowing that, parallelly, we are also ensuring that those prospects are multilaterally funded. Even with many of those municipal bodies, along with these finance commissions, our

main focus remains on

multilaterally funded prospects or projects, and that gives us better security. We have known that some of the government's recent challenges we face, but those are definitely a prospect, and many of those cities... We are getting into those details and final things of it, where those investments are heading, what, and we would be tracking them very closely to ensure that the opportunity.

And of course, Santosh, whatever be those opportunities, we will continue to put it through our filter that the projects are either multilaterally funded, sovereign-backed, federal government scheme like Amruth, like Namami Gange on the back of it, or a letter of credit. We will not take any exposure on the states, and this is a stated position from our side.

Great. Secondly, my question was about competition in the international market. So are you going to see some kind of competition from Chinese players in the projects that we are taking or it's been like as it was two years or three years back?

See, generally, no, would be the answer, I would say. At least on the technology side, we see more European competition, the Spanish, the Israeli, the French, that's the competition in the international market that we do. And our core is technology, so we will worry only about that competition. When it comes to construction, where we generally find the Chinese better, we cooperate in some of the jobs where they could become construction partners or construction subcontractors, but generally we don't see them in competition when it comes to the technology side. In the kind of jobs that we are bidding, desalination, recycle, reuse, effluent treatment, industrial water, we generally see only the European competition.

Thank you so much, sir. I wish you all good luck. Thank you, sir.

Thank you. The next question is from the line of Vicky, an individual investor. Please go ahead.

Mr. Vicky, please proceed with the question. As there is no response from this participant, can we move forward with the next question?

The next question is from the line of Suyesh Bhave from Wealth Guardian. Please go ahead.

Sir, building on the question asked earlier, an earlier participant, from what I understand is that our entire municipal order book or a large chunk of it is what is backed by the MLI, the multilateral institutions and sovereign guarantee. So, how do we ensure payment security on the industrial side of the business? Thank you.

I... As we have been talking, we are very focused on the risk profile of any project. We do evaluate potential, evaluate those customers with whom we are working beyond municipal, and many of them are covered with LTs, wherever private customers we are working. So, looking at the health of the organizations for whom we are working, and coupled with LCs, we are ensuring that payment securities are intact, and we don't see any risk on that count. Wherever we are working, we are not generally encountering any of those payment risks with the private or industrial customer.

Okay, thank you. Thank you.

Thank you. The next question is from the line of Mr. Hitesh, an individual investor. Please go ahead.

Good evening.

I have two questions. As seeing the discussion and maybe a couple of questions I have already gone through, as I can see that you have a split order book, like India as well as abroad, which is approximately 50%. So seeing the political challenges in the past one, one and a half years. Do you feel that these kind of, like, abroad orders may take some kind of, you know, backlog or a tough market may arise in future for the company?

See, this is, since geopolitical challenges are part of the game, I don't think that is going to pose challenges. It's not being new, whether it is the African continent or earlier in the Middle East. We've always seen that we have an opportunity to work there. So we don't generally see. In fact, if you see some of the times when we worked on these, let's say, difficult projects, it was right in the middle of these geopolitical challenges. So, we don't really see that affecting the business in any way. Plus, we are anyway very diversified. We are not concentrated when it comes to the international geographies. We are spread across CIS, Middle East, Africa, South Asia, Southeast Asia. So this spread allows us to also mitigate some of these concentration risks that may come on account of very localized. Political or geopolitical issues. So, we don't generally see, one, by virtue of our diversification, and two, by virtue of the fact that the kind of projects that we do. And number three, most of these projects that we do internationally are multilaterally backed. So, despite having any of these, we have very, very good payment securities, and when it is multilaterally backed, you can be sure that the payments are secure in the project will progress forward. The multilaterals, we don't see, are going to reduce their investment, especially on a priority sector like water. So, for us, as a sector, we remain positive, and we feel there's a lot of tailwinds that are there in terms of the sector.

Right, very good. And the second question would be that, as I can see, that over the past one year or so, in 25 to 26 financial years, maybe I'm talking about, the results are pretty good. Maybe quarter and quarter as well as year on year basis. Despite that, the stock has seen significant correction. Plus, the company's shareholding is pretty less. I mean, the company is doing pretty well across different parameters, as you've told. But over the past six to seven years, I cannot see, you know, company increasing their shareholding or things like that. You have decent amount of cash capital also in your balance sheet. Despite that, the share has seen a significant amount of correction. So maybe if you could put some light on that.

See, what we cannot control, we will not worry about. And you have seen this correction is broad-based. We'll work on what we can improve. And I think you mentioned that our results in the last one year has been growing. I just want to jog back. And if you see from 2020 onwards, we have been on the growth path, especially profitable growth.

Our path has grown at a CAGR of over 30-35%.

So it's not isolated to this last one year. And second, you have also seen the stock move from 80, 100 rupees at a COVID level to all-time highs. So we don't... Fundamentally, we have been performing, we have been improving, and that is what we will control. What happens in the market, that's something which there's no point of worrying about, right? And we will continue to perform assets, and I'm sure what we have seen in the past, the market ultimately rewards people who are consistent, and that is what we will focus on, continuing to remain net cash positive, continuing to deliver profitable growth, and maintaining a very good balance sheet. And I'm sure as we move forward, in the longer term, a company like us should get the appreciation that it will get. But we will not run behind that. That's something not in our control. We will run behind performance, which we have delivered, and we will continue to deliver.

Thank you so much. But just one question remains unanswered. In case a promoter increases his or her shareholding, that gives some amount of positive sentiment to the investors also, to the shareholders also. So from that point of view, your investment in the past six to seven years has not increased in any form.

So, Hitesh, the promoters have not sold even a share, if at all. In the early years, they have done some increase in shareholding. These are professional promoters who are there in the company. They have held on to their shares in the best times or in the worst times, as you may call it, and that should give enough confidence in the market, is our feeling. Thank you. The promoters adding shares, if that is going to change the sentiment, I think then we are too myopic in the view. What you should also look at is that the promoter holding has not gone down at all. They have remained steadfast with this company, and I'm sure even going forward, they will be here. These are our professional promoters. Everything is invested into this organization. So that should give you a lot of confidence that the promoters are completely committed to this thing.

Take care. Thank you so much.

Thank you, Ritesh.

Thank you. The next question is from the line of Shantosh Keshiri from SKKHUF. Please proceed.

Sir, I have one more question regarding AP GenCore IDOC that we did in 2023-2024. So, recently, there was some... I don't know if this was reported by Bapa, but somewhere I read that the Supreme Court... We have rejected the arbitration request of TechPro, and I also understand that Mobal has been able to complete the project. So, where do we stand in terms of the recovery from APGENCO? Can we expect some recovery in the next six months or one year? And that amount is large, I understand, something like 300 plus interest. Compensation, it could be a big amount.

What we are talking about is the 140 crores or DS Genco, which is the retention money. That's where the Supreme Court ruled in favor. Of course, The legal process, the administrative process takes elongated time, which is not in our control, which is the reason why we said we will take out from our books what is not receivable, or what is not immediately receivable, and let us focus on our core business, and that's what we did a couple of years back. We are continually following this Santosh, and we are pursuing all legal routes to see how fast we can recover. Obviously, this is also one of the focus of the management. While we have taken it off the books, we have not taken it off our sites. But I think we can't put a date or timeline to this, because it is completely different. So, we will leave it at that at this point in time, but I will give you the assurance that at a management level, we have not lost sight of any of these.

So, the amount is legally still recoverable, right? Because we completed the project, and AP Genco has been able to extract power out of this generation unit, and they have been able to build the customers also. Right, sir?

Yeah, yeah. The project was completed, started commercial operation date, more than five years back, Santosh. Thank you. And of course, in AP Genco, there are balance of plants, small balance of plants, which is there. But on TS Genco, we have completed our project, and that is why even the Supreme Court rejected the arbitration request of TechPro. But as it stands, it will take a few more steps. Obviously, everybody will try to see what they can do. But we have not lost sight. We continue to pursue all legal routes to recover this money. But what is most important to understand is none of these is affecting or important from the current scope of business that we are running. If and when we get this, I'm sure it will be a bonus. But as investors, I think you should not worry about this because the business is anyway performing well despite this.

Yeah, that we understand, sir. Only thing was, since the amount is big, and the recovery of this would be really giving a boost to the company's finances.

So, we also share your sentiment, and I am sure if things go well, we should be on the better side of things. But that is not in our control, as I said. But as and when it comes, fully agree with you, it is going to be a good fillip for us also.

Thank you so much.

Thank you, Santosh.

Thank you. The next question is from the line of Suvankar from Tunghai Family Office. Please proceed.

Hi, thank you for this opportunity. Can you hear me?

Yes, we can.

Yeah, yeah. So my first question is, could you share the correct mix of your domestic order book between government and private sector lines?

Sorry, what was your question?

Yeah, the mix of order book, domestic order book between government and private clients.

82% of our order book is from municipal clients and 18% from industrial clients.

Okay. My second question is around after the budget, right? So, are you seeing any traction or demand in government orders?

As we were looking at earlier, there are investments planned in various cities. There are multiple cities with a defined corporation. Growth is planned on that. They are to be provided with next level of infrastructure, and we see them as a prospect, as a potential opportunity. So, that area of government investment. In addition to that, ganga cleaning, other river cleaning prospects are also there. So, overall, as a part of budget, we see government continuous patronage in this sector and investment in the social sector. That is getting maintained. So, that is definitely opening up opportunities for us.

Thank you.

Thank you. As there are no further questions from the participants, I would now hand over the conference to Mr. Shailesh Kumar for closing comments. Over to you, sir.

Thank you once again for your active participation in our Q3 and 9-month FY26 earnings call. The analysis presentation is available on our website. Should you have any further questions, please feel free to reach out to our AdFactors IRP or contact us directly. We appreciate your continued interest and support, and wish you a pleasant evening. Thank you very much.

Thank you. On behalf of VATech's WowBag Limited, that concludes this conference. Thank you for joining us, and you may not disconnect your lines. Thank you.