Rekha Jhunjhunwala stock VA Tech Wabag: ₹2,400 cr Saudi project cancelled - Should you buy after 18% rise in 6 months?

Rekha Jhunjhunwala portfolio stock VA Tech Wabag shares are likely to remain in focus on Monday, November 16, after the company disclosed that a major desalination project in Saudi Arabia, valued at approximately ₹2,400 crore, had been cancelled by the customer, Saudi Water Authority, citing internal reasons. Rekha Jhunjhunwala holds an 8.0% stake in VA Tech Wabag Ltd as of September 2026. The shares ended 2% lower at ₹2,040.10 apiece on the BSE on Friday.

The stock had touched a 52-week high of ₹2,320 in September 2026 and a 52-week low of ₹1,033.95 in January 2026. Despite the recent decline, it has gained 3.5% in one month, 8% in three months, 48% in six months, 45% in one year and 506% over five years. VA Tech Wabag: Why was the ₹2,400 crore Saudi project cancelled?

In an exchange filing on Saturday, November 14, VA Tech Wabag said it had received the award in July 2025 to execute a 300 million litres per day (MLD) mega seawater desalination plant at Yanbu, Saudi Arabia. Following the award, the company completed the required formalities and executed the contract, which was submitted to the customer for counter-signature and formal commencement of the project.However, Saudi Water Authority subsequently notified all tender participants through the Kingdom's Etimad electronic government procurement and tendering platform that the tender had been cancelled due to internal reasons attributable to the customer. Wabag said it was approaching the authority to obtain further clarity on the reasons for the cancellation and determine the next course of action.

The project covered the design, engineering, supply, construction and commissioning of a 300 MLD desalination facility at Yanbu on Saudi Arabia's west coast. Its contract value was approximately $272 million, equivalent to 1.019 billion Saudi riyals or around ₹2,400 crore. The development follows a similar setback in December 2024, when the Saudi Water Authority cancelled another 300 MLD desalination project in the country.

At the time, the authority had informed tender participants that the cancellation was due to internal administrative procedures. VA Tech Wabag Q2 results and FY27 growth outlook VA Tech Wabag reported revenue of around ₹1,000 crore and profit after tax (PAT) of ₹104 crore in Q2 FY27, with margins at 14.4%. CFO Skandaprasad Seetharaman expects revenue growth in FY27 to be at the higher end of the company's guidance range of 15-20%.

Growth could exceed this range if anticipated orders materialise. The company's order book has crossed ₹20,000 crore, compared with ₹7,000-10,000 crore earlier. "We are very confident with the order book as well as the bid pipeline; the year should also be strong," Seetharaman said.

The company expects to sustain margins in the 13-15% range, while continuing to focus on profitable growth and cash generation. Should you buy VA Tech Wabag shares? Motilal Oswal has reiterated its 'Buy' recommendation on VA Tech Wabag, with a target price of ₹2,529 per share.

The brokerage said the company remained well-positioned for sustained growth, supported by regular order inflows and normal project execution, including in the war-affected West Asia region.The brokerage noted that Wabag's current order book of around ₹20,000 crore was equivalent to five times its FY26 revenue. Along with a strong bid pipeline, this provides visibility for revenue growth of 20% over the next three to four years, it said. After delivering a compound annual growth rate (CAGR) of 7% in revenue, 17% in EBITDA and 28% in adjusted profit after tax (APAT) over FY21-26, Motilal Oswal expects the respective metrics to grow at CAGRs of 19%, 26% and 23% over FY26-28.

The brokerage also highlighted the company's strong free cash flow generation, net cash position of ₹1,000 crore and improving return ratios. At 21 times its estimated FY28 price-to-earnings ratio, Motilal Oswal considers the stock attractive. Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.