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VA Tech Wabag Declines in Mumbai as Higher Costs Weigh on Profit

VA Tech Wabag Ltd. (VATW) fell the most in almost two years in Mumbai trading after India’s biggest maker of water treatment plants reported quarterly profit that missed estimates.

VA Tech shares slumped 4.9 percent, the most since Dec. 20, 2011, after the company reported a second quarter profit of 174.2 million rupees ($2.8 million) yesterday. That fell short of the 207 million-rupee median of seven analysts’ estimates compiled by Bloomberg.

Total costs rose 37 percent to 4.37 billion rupees compared with a year earlier, the Chennai-based company said in a statement to the stock exchanges. Revenue from its Indian operations remained flat, at 1.56 billion rupees compared with 1.52 billion rupees a year earlier.

“Despite strong order book, standalone revenues were flat year-on-year (18 percent below our estimates), showing signs of an execution slowdown in India,” Nitin Bhasin and Tanuj Mukhija, analysts at Ambit Capital Pvt., wrote in a note to clients today. They maintained a buy rating on the shares.

VA Tech has orders valued at more than 20 billion rupees including in India, Egypt, the Philippines and Romania, the company said in a statement to the Bombay Stock Exchange today.

Net sales rose 34 percent to 4.65 billion rupees, it said.

VA Tech’s shares closed at 535 rupees apiece at the end of the day’s trade.

To contact the reporter on this story: Archana Chaudhary in New Delhi at achaudhary2@bloomberg.net

To contact the editor responsible for this story: Randall Hackley at rhackley@bloomberg.net

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