VA Tech Wabag Shares Drop 19% After ₹2,700 Cr Order Cancellation

Shares of VA Tech Wabag tumbled around 19% on Wednesday, hitting a low of ₹1,522.30 on the BSE. This sharp decline followed the announcement that the Saudi Water Authority had canceled a significant ₹2,700 crore order for a 300 MLD Mega Sea Water Desalination Plant.

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The cancellation was communicated on December 16, 2024, as part of the Saudi Water Authority’s internal administrative procedures. This development comes just months after Wabag had secured the order on September 6, 2024. While the company has reached out to the customer to understand the reasons behind the decision, the abrupt move has raised concerns among investors.The canceled project was seen as a milestone for Wabag, given its scope and strategic importance. 

In an exchange filing on December 17, 2024, Wabag said, “With reference to our above intimation dated September 06, 2024, relating to the 300 MLD Mega Sea Water Desalination Plant Order in the Kingdom of Saudi Arabia, we hereby inform that the Customer has notified all tender participants on December 16, 2024, that the said tender stands cancelled pursuant to their internal administrative procedures.”

With Wednesday’s drop, Wabag’s share price has corrected 22% from its all-time high of ₹1,944.00, reached on December 9, 2024. The shares had shown impressive growth earlier this year, surging 145% in 2024 compared to the BSE Sensex’s 11.7% gain during the same period. Over the longer term, the stock has climbed 234% from its 52-week low of ₹581.50 recorded in December 2023.

VA Tech Wabag offers comprehensive water solutions for both municipal and industrial sectors. As a pure-play water technology multinational, the company provides end-to-end services, including design, engineering, construction, and long-term operational management. This positions Wabag as a significant player in the global water infrastructure space.

In terms of financial performance, Wabag reported strong results for H1 FY25. Its consolidated revenue stood at ₹1,326.8 crore, while profit after tax (PAT) rose 31% year-on-year to ₹125.6 crore. The company’s order book at the end of the first half was ₹14,600 crore, including framework contracts.

While the cancellation of such a large project is undoubtedly a setback, Wabag’s diversified order book and ongoing bids act as buffers against long-term impact. However, the immediate market reaction underscores the importance of clear communication from the company about its plans to address the issue.

Conclusion

The cancellation of the ₹2,700 crore order by the Saudi Water Authority has dealt a blow to VA Tech Wabag, reflected in the sharp fall in its share price. Nonetheless, the company’s strong order book, pipeline of projects, and solid financial performance may provide some resilience in the medium term. The company is engaging with the customer to understand the reasons for the cancellation and looks to secure new opportunities in the water EPC sector.