VA Tech Wabag Reports 20.1% Profit Growth in Q2, Revenue Rises 19.2% Amid Margin Dip

VA Tech Wabag Limited has reported strong financial results for the September quarter (Q2) of the financial year 2024-25. The company announced a consolidated net profit of ₹84.8 crore, marking a significant 20.1% rise compared to the same period last year. Revenue from operations also showed robust growth, increasing by 19.2% to ₹834 crore, largely driven by successful project execution both domestically and internationally.

Despite the profit and revenue growth, the company experienced a 4.6% decline in EBITDA, falling to ₹89.3 crore from ₹93.6 crore in the year-ago quarter. This decline was attributed to a contraction in operating margins, which stood at 10.7% in Q2 FY25, down from 13.4% in Q2 FY24.

For the first half of the financial year 2024-25 (H1 FY25), VA Tech Wabag reported consolidated revenue of ₹1,568.5 crore and a profit after tax of ₹150.6 crore, representing a 20% year-on-year increase. The company also highlighted its 11th consecutive quarter of net cash-positive performance.

**Future Outlook:** Rajiv Mittal, Chairman and Managing Director, expressed optimism about future growth. He stated that strategic wins in Ultra-Pure Water and Compressed Bio-Gas segments are opening new avenues in the fast-growing ‘Future Energy Solutions’ sector. With a substantial order book of approximately ₹158 billion and a well-diversified global presence, the company is poised for accelerated growth.

**Stock Performance:** On Friday, VA Tech Wabag's shares closed 2.38% higher. However, year-to-date, the stock has seen a decline of 17%.

**Impact:** The results indicate steady revenue and profit growth, which is positive for investors. However, the decline in EBITDA and operating margins warrants attention. The company's strategic focus on new energy solutions and a strong order book provide a positive outlook for future revenue visibility and diversification, potentially offsetting current margin pressures. Impact Rating: 6/10

**Difficult Terms:** * **Consolidated Net Profit:** The total profit of a parent company and its subsidiaries after accounting for all expenses, interest, taxes, depreciation, and amortization. * **Revenue from Operations:** The total income generated from the company's primary business activities before deducting any expenses. * **EBITDA:** Earnings Before Interest, Taxes, Depreciation, and Amortization. It's a measure of a company's operating performance, indicating profitability from its core business before financing and accounting decisions. * **Margins:** The difference between revenue and cost, usually expressed as a percentage. It indicates how much profit a company makes per unit of sales. * **Operating Margin:** Profitability relative to revenue from core business operations. It shows how efficiently a company manages its operations. * **Half Year:** A period of six months. * **Net Cash-Positive Performance:** When a company's cash inflows from its operating activities are greater than its cash outflows, indicating strong cash generation. * **Order Book:** The total value of contracts that a company has secured but not yet fulfilled. It indicates future revenue potential. * **Ultra-Pure Water:** Water that has had virtually all impurities removed, used in highly sensitive industrial processes such as semiconductor manufacturing and pharmaceuticals. * **Compressed Bio-Gas (CBG):** A renewable fuel produced from organic waste materials. It is upgraded biogas compressed to a pressure similar to natural gas and can be used as a substitute for fossil fuels. * **Future Energy Solutions:** Technologies, services, and business models focused on developing and deploying sustainable, renewable, and low-carbon energy sources.