I think , it was cash flow issue which was resulting in execution delays.
If you notice, new major orders wins are in private space where payment terms are more favorable …
So, I count this as positive.
Another thing to note is RJ has appointed Amit Goel as his nominee on company’s board. In doing so, he was exited or (<1%) ion exchange. this highlights his confidence on the company.
Finally , they have global patents , it shows their technical depth.
So, I’m bullish on this company… Management survived critical 3-4 yrs and avoided excess dilution of equity, which is always positive thing.
Any idea, what is/will be the implication of the sanctions/current Russia-Ukrain geopolitical risk ? There seems to some revenue recognised from this AGCC, Russia – Integrated Industrial ETP ? Also considerable amount is part of the order book?
• Order Intake of Rs. 1,496 Crore
• Consolidated Revenue from operations of Rs. 1,382 Crore;
• Consolidated EBITDA of Rs. 126 Crore; up by 30% YoY
• Consolidated PAT of Rs. 77 Crore; up by 85% YoY
• Standalone Revenue from operations of Rs. 1,058 Crore;
• Standalone EBITDA of Rs. 107 Crore; up by 52% YoY
• Standalone PAT of Rs. 60 Crore; up by 99% YoY
Order book:
• Order Book of over Rs. 10,300 Crore including Framework contracts; 3x revenue visibility.
Though the orderbook is increasing for the last 2-3 years but that didn’t translate into increase in revenue. Does that mean the execution capacity of the mgmt is not good?
Have the same question Souresh. Although the mgt has stopped issuing guidance post Covid, there is an indication that the order book for the current fiscal may be another 4000 cr which indicates a little over 3.5X of order book to trailing revenues. The break up of the order book and execution between municipal vs industrial becomes critical as one would expect municipal being B to G model may potentially be a dragger and therefore may not translate to execution. The latest investor presentation highlights the order intake ratio between Municipal vs Industrial at 52% to 48%.
Tracking this break up both from execution and order book very closely
Ranked 3rd Globally by GWI recently (Previously Ranked 4th)
Continuing their focus on Engg & Procuement while Civil stuff is outsourced - this is leading to asset light model (I think this would eventually help increasing core RoCE)
Rationale :
1.They have learned lesson from 2016-2017 performance and started implmenting those learning
2. Last 2-3 years Management has changed the approach and their results are stable Net Positive Cash flow
3. Their IPs & Global ranking has increased (Technology driven business)
4. Low PE -12-13 PE & Recently Management commentrary & their execution seems in line (based on last 2 qtr call)
5. Recent Win of 4400 Cr is stepping stone deal (Order back log is approx 15000 cr)
I think these factors will be valued by market and seems strong candidate for Re rating.
Note: I am Invested in the stock and accumalating it(recently past) so my views can be bised.
Consolidated Total Income of Rs 3,014 crore and Consolidated Revenue from operations of Rs 2,961 crore
Consolidated EBITDA (before exceptional items) of Rs 355 crore; up 43% YoY
Consolidated PAT (before exceptional items) of Rs 229 crore; up 74% YoY
Standalone Total Income of Rs 2,386 crore and Standalone Revenue from operations of Rs 2,325 crore
Standalone EBITDA (before exceptional items) of Rs 347 crore; up 81% YoY
Standalone PAT (before exceptional items) of Rs 218 crore; up 136% YoY
Cash Flow from Operations for the FY23 of Rs 85 crore
Net Cash position as at end of Q4FY23 at Rs 101 crore
Order Intake of Rs 6,844 crore
Historic high Order Book position of over Rs 13,219 crore including Framework contracts; Providing Robust revenue visibility
Exceptional Item: (from financial results statement)
Pursuant to the inordinate delays in recovery of the receivables from Tecpro due to the prolonged legal proceedings at the National Company Law Tribunal (‘NCLT’) and from APGENCO due to project
completion delays not attributable to the Company, the Receivables and other current assets pertaining to these projects to the tune of Rs. 28,923 Lakhs have been written off and reported under
Exceptional Items in the Statement of Profit and Loss in the current financial year. Accordingly previous period balances are reclassified. The Company will continue its efforts to pursue the recovery of these balances.
The Company has completed the project for TSGENCO and is in the process of recovering the receivables and retentions of Rs. 11,078 Lakhs. The Supreme Court has appointed a sole arbitrator to decide on all claims between the parties and the Company expects to recover the receivables and retention on completion of the arbitration process.
Seems Vatech Wabag is on improvement path with focus on increasing borromline, improving cash flows, participating in projects funded by intl agnecies like JICA, WB, reducing debt & debtor days. Valn seems ok
Over all I find it solid turn around and sustainable growth story for next 2-3 yers
+ve:
Good healthy order book
Management focus on EP order (avpoiding Constuction part as much as possible) i.e will help in improving margins
Also Semicondutor and Hydrogen production will be added booster for the business
Order do have long term maainternce contract which will make revenue more predictable
most important VA Tech is on ESG theme if the perfromance contuine for next 2 qtr definately it will be good rerating candidate. for now I think its PE is 15 only as last qty they have written-off approx 240 Cr receivable.
Over all I think workst is over and good performance has already started and I think in next 12-18 month if it shows similar to last qtr(excuding write off) than it will be re rated to 25X PE for 38 to 45 EPS.
