Va Tech Wabag (WABAG)

FairStock Score: 42/100 — MIXED

Score breakdown: P/E: 1/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• High capital efficiency: ROE 19.29% and ROCE 19.70% with very low debt/equity of 0.10.
• Strong growth momentum: sales up 18.53% and profit up 35.67%; latest quarter net profit ₹91 Cr on sales ₹961 Cr.
• Piotroski F-Score of 7/9 indicates sound financial fundamentals.
• PEG of 0.84 suggests valuation is not excessive if profit growth is sustained.

Concerns

• Promoter holding is low at 19.09%, raising governance and minority-alignment concerns.
• Dividend yield of only 0.32% offers little cash return to shareholders.
• P/E of 22.81 and P/B of 5.63 leave a thin margin of safety.
• FairStock Score of 41/100 calls the overall picture mixed.

AI Analysis

I always prefer businesses that earn high returns on capital without leaning on debt. Va Tech Wabag clears that first hurdle: ROE of 19.29% and ROCE of 19.70% are respectable, and with debt/equity at only 0.10 the balance sheet is conservatively financed. The latest quarter shows net profit of ₹91 Cr on sales of ₹961 Cr, so the earnings engine is running. Sales grew 18.53% and profit grew 35.67% — a sign of operating leverage or pricing discipline, though I must be careful not to extrapolate one year far into the future. The Piotroski F-score of 7 out of 9 supports the picture of a fundamentally sound company. But Graham taught me to separate price from value. At ₹1,464.80, the P/E is 22.81 and P/B is 5.63. The market is paying for high quality and growth. The PEG of 0.84 makes the valuation look less demanding if profit growth continues, but that is a big if in an execution-heavy business like water infrastructure. There are two things that bother me. First, promoter holding is only 19.09%; in India, I prefer a larger owner stake to align interests. Second, the dividend yield of 0.32% means the small shareholder is barely paid while waiting. The FairStock Score of 41/100 calls the picture 'mixed' — and I agree. It's not a bad business, but it's not a wonderful business at a wonderful price. The 52-week range tells me the market itself has been uncertain, with the stock swinging between ₹1,033 and ₹2,253.50. If I owned it, I would hold as long as execution and returns hold up. For a new purchase, I would wait for a lower price or clearer evidence that the growth is durable.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer