Wabag profit rose, but faster cost growth cut operating margin
Consolidated net profit grew +28.64% YoY, helped by lower interest costs and higher other income, while operating margin fell 1.05 percentage points.
Filed 21 May 2026, 22:19 IST · after market close · Va Tech Wabag Ltd (WABAG)
Key takeaways
- Consolidated revenue grew +22.33% YoY, but expenses grew +23.79%, narrowing operating margin by 1.05 percentage points to 11.13%.
- Net profit rose +28.64% YoY as interest costs fell -22.79%, although other income contributed 18.01% of pre-tax profit.
- The stock gained +1.48% on the first trading day, below its 2.36% median absolute move after the past eight results.
Price around the results
Revenue growth did not translate into operating leverage
Va Tech Wabag’s consolidated revenue grew +22.33% YoY in Q4FY26, but expenses grew faster at +23.79%. That cost gap reduced operating margin by 1.05 percentage points to 11.13%. Sequentially, revenue rose +47.13%, while expenses rose +49.68%, cutting margin by a further 1.51 percentage points.
Lower interest costs supported reported profit quality
Interest costs fell -22.79% YoY and -7.26% QoQ, allowing pre-tax profit to grow faster than operating profit. Other income rose +131.82% YoY and accounted for 18.01% of pre-tax profit, making it a material contributor to reported earnings. The tax rate increased by 0.56 percentage points YoY, so the net profit gain was not helped by a lower tax rate.
Margin remains below the Utilities peer set
The operating margin moved from 10.70% in Q2FY26 to 12.64% in Q3FY26 and 11.13% in Q4FY26, so the latest decline follows a rebound rather than marking a third straight quarterly fall. Wabag’s margin was 24.06 percentage points below the 35.19% median of 17 Utilities companies that had reported, placing it second from the bottom in that group.
Management points to order-book and O&M expansion
Management said the company had an order book of INR 172 billion-plus and described it as providing growth visibility. The company told analysts it targets O&M revenue at 20% of total revenue over the next three to five years. Management also highlighted a 45 MLD Chennai TTRO order, a 300 MLD Yanbu desalination order in KSA and a tie-up to establish 100 CBG plants.
Initial market reaction was muted, then widened
The stock gained +1.48% on the first trading day after the results, with a +2.80% opening gap and volume at 4.78 times its reference level. This initial move was smaller than the stock’s 2.36% median absolute reaction across its past eight results. The move reached +10.32% after five sessions and +15.50% after 15 sessions, indicating that the response strengthened beyond the first day.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹1,414 cr | ₹961 cr | +47.13% | +22.33% |
| Other income | ₹31 cr | ₹19 cr | +58.55% | +131.82% |
| Expenses | ₹1,257 cr | ₹840 cr | +49.68% | +23.79% |
| Operating profit | ₹157 cr | ₹122 cr | +29.55% | +11.79% |
| Operating margin (%) | 11.13% | 12.64% | — | — |
| Interest | ₹17 cr | ₹18 cr | -7.26% | -22.79% |
| Depreciation | ₹2 cr | ₹2 cr | -6.25% | +7.14% |
| Profit before tax | ₹170 cr | ₹121 cr | +40.07% | +29.60% |
| Tax | ₹42 cr | ₹30 cr | +39.67% | +32.59% |
| Net profit | ₹128 cr | ₹91 cr | +40.20% | +28.64% |
| EPS (₹) | ₹22.68 | ₹15.63 | +45.11% | +20.45% |
Operating margin of 11.13% compares with a Utilities sector median of 35.19% across 17 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +1.48% | +1.21% |
| Next session | +3.00% | — |
| 5 sessions | +10.32% | +11.47% |
| 15 sessions | +15.50% | — |
| 30 sessions | +56.20% | — |
Volume on the results session was 4.78× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Guidance & outlook
- The company reports an order book of INR 172 billion-plus, providing strong growth visibility.
- The company targets O&M revenue at 20% of total revenues over the next three to five years.
Expansion
- The company has tied up with Peak Sustainability Ventures to establish 100 CBG plants.
New orders
- The company secured a mega PPP order from CMWSSB for a 45 MLD TTRO plant in Chennai.
- The company secured a mega 300 MLD Yanbu desalination order from SWA in KSA.
New initiatives
- The Blue Seed initiative is supporting emerging water-sector start-ups, with an investment committed to Nimble Vision.
- The company is piloting an AI/ML-based NRW reduction solution in GNN TTRO.
- The company piloted an AI-based Operations & Decision Support System at the AMAS plant in Bahrain.
- The company is exploring technologies to digitalize other plants and networks in India and the Middle East.
- The company collaborated with a leading technology provider for Bio-CNG projects.
What to watch
- Whether consolidated operating margin recovers from 11.13% after the 1.51-percentage-point QoQ decline.
- Whether other income remains near 18.01% of pre-tax profit.
- Progress in converting the INR 172 billion-plus order book into revenue while management pursues its 20% O&M revenue target.