Shares of VA Tech Wabag plunged over 16% on December 18, following the cancellation of a $317 million (₹2,700 crore) order for a mega seawater desalination plant in Saudi Arabia. The order, secured on September 6, was cancelled due to internal administrative procedures by the Saudi Water Authority, as communicated to all tender participants on December 16.
The project involved the engineering, procurement, construction, and commissioning (EPCC) of a 300 million litre per day (MLD) desalination plant in Yanbu, located on the west coast of Saudi Arabia near the Red Sea. VA Tech Wabag described the facility as a greenfield project designed with updated desalination technologies, aiming for energy efficiency and adherence to environmental standards. The plant was expected to be completed within 30 months.
The cancellation comes after the company’s long-standing presence in Saudi Arabia, where it has been building and operating water and wastewater treatment plants for over four decades. Globally, since 1995, VA Tech Wabag has constructed more than 60 desalination plants.
Despite the setback, the company reported a strong H1 FY25, with consolidated revenue from operations at ₹1,326.8 crore, and profit after tax (PAT) up 31% YoY to ₹125.6 crore. Its order book at the end of H1 FY25 stood at ₹14,600 crore, including framework contracts.
The cancellation had an immediate effect on the company’s stock price. As of 9:20 AM, shares were trading at ₹1,586.5 on the NSE, down 15.8% from the previous close. However, the stock has still delivered a year-to-date gain of 161.93%.
While the cancellation of the Saudi desalination project represents a major development, VA Tech Wabag remains engaged with the Saudi Water Authority to understand the decision further. The impact of this cancellation on the company’s long-term growth remains to be seen.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
Published on: Dec 18, 2024, 1:37 PM IST
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