Wabag Slumps Most in Month After Higher Costs Cut ProfitArchana Chaudhary
VA Tech Wabag Ltd., India’s largest maker of water-treatment plants, dropped the most in a month in Mumbai after second-quarter profit declined by almost a third.
Wabag fell 2.8 percent on the first day of trading after the results. The Chennai-based company said net income slid 32 percent as orders from Indian operations were almost flat while raw material costs rose. The stock closed at 1,569.95 rupees after tumbling as much as 7.2 percent. Despite the drop, the shares have now almost tripled this year.
“Our order intake in India was sluggish because elections led to delays in the government’s decision-making process,” Managing Director Rajiv Mittal told analysts today on a conference call. “But we continue to maintain our annual guidance and see a strong traction in awarding of projects over the next few months, considering the government’s focus on water and waste treatment.”
The company plans to bid for waste-treatment plants under a 510 billion-rupee ($8.3 billion) plan announced by Prime Minister Narendra Modi to clean the Ganges, India’s biggest and holiest river, Mittal said.
Wabag expects orders worth as much as 34 billion rupees this fiscal year, Mittal said. The company has 16.18 billion rupees of contracts so far in 2014, he said.
The company will also bid for projects under a 195 billion-rupee plan by the New Delhi government to clean the Yamuna River, the executive said.
Wabag orders from abroad include works in Turkey, Saudi Arabia, Romania and Sri Lanka, it said on Nov. 8.