WPIL — Q3 FY25 earnings call

Call held 12 Feb 2025

Management summary

WPIL reported a mixed Q3 FY25, with consolidated revenue of ₹381.6 crores and PAT of ₹37.1 crores. While 9M FY25 showed robust 15% YoY revenue growth, Q3 execution was impacted by a slowdown in the domestic project division, mainly due to delayed payments from the Jal Jeevan Mission, leading to increased receivables. The company is actively expanding its international turnkey project capabilities through strategic acquisitions and expects a normalization of execution and receivables in the coming quarters.

Highlights

  • Consolidated revenue for Q3 FY25 reached ₹381.6 crores, with EBITDA at ₹48.1 crores and PAT at ₹37.1 crores.

  • Consolidated EBITDA margin for Q3 stood at 12.6% and PAT margin at 9.72%.

  • For 9M FY25, consolidated revenue grew 15% YoY to ₹1235 crores, with EBITDA at ₹212.7 crores (17.22% margin) and PAT at ₹150.3 crores (12.17% margin).

  • The international order book as of December 31, 2024, was ₹548.2 crores, while the domestic project order book was ₹2590 crores.

  • Domestic products order book stood at ₹398.8 crores.

  • Project execution slowed in Q3 due to increased receivables, primarily ₹400 crores from the Jal Jeevan Mission (JJM) scheme.

  • Three strategic international acquisitions (Eigenbau, MISA-SRL, PCI) are expected to contribute over ₹375 crores in revenue, enhancing the turnkey project division.

Concerns

  • Slowdown in project execution due to increased receivables

  • Blocked receivables from Jal Jeevan Mission

Key financials

2 periods

Headline

  • Consolidated Revenue
    ₹381.6 Cr
  • Consolidated EBITDA
    ₹48.1 Cr
  • Consolidated EBITDA Margin
    12.6%
  • Consolidated PAT
    ₹37.1 Cr
  • Consolidated PAT Margin
    9.7%

9M

  • FY25 Consolidated Revenue
    ₹1,235 Cr
    YoY +15%
  • FY25 Consolidated EBITDA
    ₹212.7 Cr
  • FY25 Consolidated EBITDA Margin
    17.2%
  • FY25 Consolidated PAT
    ₹150.3 Cr
  • FY25 Consolidated PAT Margin
    12.2%

What they filed

Q1 FY27: revenue up 32.2%, net profit up 126.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue491 382 572 379 426 −13%539 +41%511 −11%501 +32%
EBITDA104 48 80 49 80 −23%113 +135%76 −5%75 +53%
Net profit70 37 -24 26 52 −26%76 +105%47 +296%59 +127%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Project Division
    ₹572 Cr 9M FY25 Revenue₹474 Cr 9M FY24 Revenue
  • International Business
    ₹454 Cr 9M FY25 Revenue₹431 Cr 9M FY24 Revenue
  • Product Business (Total)
    ₹660 Cr Revenue
  • Standalone Q3
    ₹217.5 Cr Revenue₹32.8 Cr EBITDA15.1% EBITDA Margin₹20.3 Cr PAT9.3% PAT Margin
  • Standalone 9M
    ₹786.7 Cr Revenue₹136.4 Cr EBITDA17.3% EBITDA Margin₹97.8 Cr PAT12.4% PAT Margin

Order book

high confidence

Total value

₹3,537 Cr

as of 2024-12-31 quantified

Execution

Product orders generally execute within 3 months to a year; project orders have longer gestation periods.

Composition

Mix 2 segments
  • Domestic Project Business 73.2%
  • Domestic Products Business 11.3%

Share of order book by segment· partial disclosure (84.5% of the book)

Project execution momentum slowed down in Q3 due to drastically increased outstandings, but the company expects a pick-up in execution and normalization of receivables in the next quarter and fiscal year. The product business order book is strong and indicative of healthy business.

Source: Prepared remarks

Capital allocation

high confidence
  • M&A Eigenbau Acquisition · Integrated

    Strengthened market position in South Africa, focuses on water and wastewater solutions.

    Revenues are already being recognized from this quarter.

    These include Eigenbau in South Africa, which focuses on water and wastewater solutions with an estimated revenue of INR700 million... Eigenbau has already been, sort of in our company and we are already taking those --recognizing the revenues from this quarter.
  • M&A MISA-SRL Acquisition · Signed

    Provider of pumping solutions across Europe and MENA, specializing in irrigation and drainage.

    Acquired in January, will see one quarter of performance.

    MISA-SRL in Italy, a provider of pumping solutions across Europe and MENA, specializing in the irrigation and drainage sector with revenues of INR900 million... MISA was acquired in January, so, you know, we will have one quarter of performance.
  • M&A Paterson Candy International Africa (PCI) Acquisition · Pending regulatory

    Specializes in water and wastewater treatment solutions, reinforcing presence in Southern and Sub-Saharan Africa.

    Transaction expected to complete by Q1 FY26, full color by mid-next year. Profit sharing 55-45.

    WPL has also entered into an agreement to acquire a 55% stake in Paterson Candy International Africa... Paterson Candy International, which specializes in water and wastewater treatment solutions, positioning WPL to benefit from South Africa's infrastructure expansion with revenues of INR2,150 million... PCI, the transaction will take, as I have said, till first quarter of FY26. So, I think surely, as these companies' transactions are completed, you will see them. And surely by middle of next year, you will have full color of all these transactions, the order books and how the revenues are looking... I think we will consolidate the full amount but we will share the profit in 55-45.
  • Liquidity Cash ₹550 Cr Receivables of ~₹400 crores are currently blocked, impacting cash flow. International cash reserves remain strong.
    Receivables is close to about INR400 crores... On a consolidated level, the cash is approximately INR550 crores... our international cash reserves are still very strong.

Guidance & targets

Execution

  • Overall execution for the year Execution · FY25 · Medium confidence Exceed last year's execution
    We are, say, as you can see presently, we are already in 9-month period --we had a very good first and second quarter. So, third quarter was a bit subdued and fourth quarter should be better. So, we should exceed last year.

    — Prakash Agarwal

  • Execution pace Execution · Next quarter onward · Medium confidence Back to normal / improved and ramped up
    I think we will be back to normal. If not, in this quarter, it should be improved and next quarter onward, it should be ramped up.

    — Prakash Agarwal

Receivables

  • Receivables clearance Receivables · Shortly · High confidence Cleared shortly / come down rapidly
    Now, the most important thing is that with the budget clarification and fresh allocation for this year, now these projects are expected to gain momentum. So, we are expecting our receivables to come down rapidly and execution to pick up in similar fashion.

    — Prakash Agarwal

Domestic Project Business

  • Traction Domestic Project Business · Next year onwards · Medium confidence Great traction
    Of course. I think we see, as I have mentioned in our thing, next year onwards we see great traction because we have built up lot of competencies, our order books have come in control, these older projects are nearing completion and we have built very good qualifications for future jobs.

    — Prakash Agarwal

Water Infrastructure Investments

  • Investments Water Infrastructure Investments · Next financial year · Medium confidence Good investments
    And I expect that next year there will be, say this financial year as per the budget and the outlook, we see good investments in water infrastructure across the country.

    — Prakash Agarwal

Consolidated Margins

  • Target margin band Consolidated Margins · High confidence 15-20%
    Our margins are consistent. We are having roughly, if you take 9 months, last year, we had 17% consolidated margins. This year, we have 17% consolidated margins. So, I think we have lots of different parts of our business. So, to look in, we should look at the overall figure where our target has always been between 15% and 20%.

    — Prakash Agarwal

Product Business Margins

  • Margin band Product Business Margins · Medium confidence 20-24%
    You're also seeing the margins in the business more, but more towards, more leaning towards the 20% to 24%.

    — Prakash Agarwal

What to watch in Q4 FY25

JJM receivables clearance

Next quarter
Current ₹400 crores blocked
Target Significant reduction in blocked receivables

Why it matters

Resolution of these receivables is crucial for improving cash flow and enabling faster project execution.

Now, the most important thing is that with the budget clarification and fresh allocation for this year, now these projects are expected to gain momentum. So, we are expecting our receivables to come down rapidly and execution to pick up in similar fashion.

Risks & concerns

  • Slowdown in project execution due to increased receivables

    high

    Project execution momentum slowed down in Q3 FY25 as outstandings drastically increased, primarily due to delayed funds disbursement for the Jal Jeevan Mission.

    Management acknowledged

  • Blocked receivables from Jal Jeevan Mission

    high

    Approximately ₹400 crores in receivables are blocked from the JJM scheme, impacting the company's cash flow and execution capacity.

    Management acknowledged

  • Fiscal tolerance reached due to delayed payments

    medium

    The company reached its 'fiscal tolerance' due to prolonged delays in government payments, affecting its ability to continue execution.

    Management acknowledged

Q&A highlights

8 direct
Reason for lower PAT growth in Q3 FY25 compared to Sep 2022 quarter Direct
One of the major reasons was the slowdown in project execution, which normally picks up in this last quarter. There was a big slowdown in funds disbursement for the Jal Jeevan mission, which affected us, as our outstandings grew drastically and we were not receiving payments. So, we had a low execution quarter and we hope this picks up in the next quarter and in the next fiscal.

Clarifies the primary reason for the subdued Q3 performance, linking it to execution slowdown and funding issues in government projects.

Asked by Saloni Modi

Major cash blocked in receivables Direct
The same reason, the Jal Jeevan mission where most of our projects are executing, the funds have been blocked for the last 6 months and now in this budget it has been cleared and we hope our receivables will be cleared shortly.

Confirms the impact of JJM funding on working capital and provides an outlook for resolution post-budget.

Asked by Saloni Modi

Current outstanding receivables for JJM scheme Direct
Receivables is close to about INR400 crores.

Quantifies the specific amount of receivables blocked due to the JJM scheme, highlighting the working capital stress.

Asked by Deepak Purswani

Opportunities in the nuclear reactor sector Direct
We have divested out of the nuclear sector because we feel that it is -- the timeframes of these nuclear projects and cost-benefit analysis did not favor it. So, we are happy to be outside this sector.

Provides clarity on the company's strategic decision to exit the nuclear sector, explaining the rationale behind it.

Asked by Deepak Purswani

Margin profile of international turnkey project acquisitions Direct
It would not be fair. These are very strong companies with very strong margins, going forward. So, the presence of these companies, they are 100 years old. They have very close relations with the clients. So, it should be better than Indian markets.

Indicates confidence in the higher margin potential of the international acquisitions compared to domestic markets.

Asked by Deepak Purswani

Impact of interim budget on project execution and receivables Direct
But you saw, in quarter 2, we mentioned also this, that we were concerned with this in quarter 2. And that quarter, we were concerned and we were hoping that things would improve in the second half. Now, that was we were you see, we had elections and we had an interim budget. So, that interim budget, they did not do anything about it and that shifted to the full budget this year. So, this -- that we lost that period. It's a bit out of our hands, I mean, it got postponed. But the good thing was, it was well recognized in this budget and should be normalized soon.

Explains the timeline of the funding issues, tracing them back to Q2 and the interim budget, and reiterates expectation for normalization.

Asked by Saket Kapoor

Insulation of international business from domestic JJM issues and ramp-up timeline Direct
So, as I tried in this presentation, I have shared one slide. Now, in this, to clarify, Eigenbau has already been, sort of in our company and we are already taking those --recognizing the revenues from this quarter. And it will ramp up and you will get -- I will be able to describe it more clearly from next presentation. And we will be giving a year-end presentation on that also. MISA was acquired in January, so, you know, we will have one quarter of performance. And PCI, the transaction will take, as I have said, till first quarter of FY26. So, I think surely, as these companies' transactions are completed, you will see them. And surely by middle of next year, you will have full color of all these transactions, the order books and how the revenues are looking.

Details the integration status and expected revenue recognition timeline for the recent international acquisitions, providing visibility for the international segment's contribution.

Asked by Saket Kapoor

Domestic product business strategy and focus on public vs private sector Direct
Further, in Indian market itself, we are quite diversified, be it in power sector, be it in oil and gas, be it in water, drainage, irrigation. So well insulated when we are not concerned by any sector and we see consistent growth going forward. And as the product lines are coming, for example, the Navy product line was added, sewage drainage product lines have been added. So those product lines are giving us growth. But yes, I would highlight that one of the sector which is improving now is the thermal power sector. So we are seeing good demand for pumps in the thermal power sector, which is new.

Highlights the diversified nature of the domestic product business, its consistent growth, and new opportunities in the thermal power sector, indicating resilience and growth drivers beyond government projects.

Asked by Devesh Kasliwal

2 min read 5 chapters

Detailed narrative

Q3 FY25 Performance Overview and 9M Highlights

WPIL reported consolidated revenue of ₹381.6 crores for Q3 FY25, with an EBITDA of ₹48.1 crores, translating to a 12.6% margin. PAT for the quarter stood at ₹37.1 crores, with a margin of 9.72%. For the nine months ending December 31, 2024, consolidated revenue grew 15% year-on-year to ₹1235 crores. EBITDA for 9M FY25 was ₹212.7 crores (17.22% margin), and PAT was ₹150.3 crores (12.17% margin). Standalone performance also showed healthy figures, with 9M FY25 revenue at ₹786.7 crores and PAT at ₹97.8 crores.

Domestic Project Division Challenges and Outlook

The domestic project division experienced a slowdown in Q3 FY25, primarily due to a significant increase in outstanding receivables from the Jal Jeevan Mission (JJM) scheme, amounting to approximately ₹400 crores. This funding gap, caused by a reduced budget allocation from the center in the last fiscal, led to a low execution quarter. Management expects a rapid clearance of these receivables and a ramp-up in execution pace in the next quarter and fiscal year, following the budget clarification and fresh allocation for JJM, which has been extended till 2028.

International Business Expansion and Acquisitions

WPIL's international revenues for 9M FY25 increased to ₹454 crores, up from ₹431 crores in 9M FY24. The company has made three strategic acquisitions in FY25 to bolster its international turnkey project division: Eigenbau (South Africa, ₹70 crores revenue), MISA-SRL (Italy, ₹90 crores revenue), and Paterson Candy International Africa (PCI, ₹215 crores revenue). These acquisitions are expected to contribute over ₹375 crores in revenue, with Eigenbau already integrated and PCI's transaction anticipated to close by Q1 FY26. The company is actively seeking further acquisitions in Europe.

Domestic Product Business Performance and Diversification

The domestic product business continues to perform well, contributing to a total product business revenue of ₹660 crores (₹453 crores international + ₹215 crores domestic). The company emphasizes its diversification across power, oil & gas, water, drainage, and irrigation sectors, providing insulation from sector-specific downturns. A new growth area identified is the thermal power sector, where WPIL is seeing good demand for engineered pumps. Management aims for product business margins to be in the 20-24% range, with overall consolidated margins targeted between 15-20%.

Working Capital and Liquidity

The company's cash flow was impacted in Q3 due to the blocking of ₹400 crores in receivables from the JJM scheme, leading to a state of 'fiscal tolerance.' Despite this, WPIL maintains strong international cash reserves. Consolidated cash and equivalents stood at approximately ₹550 crores. Management is confident that the resolution of JJM funding issues will normalize receivables and improve liquidity, enabling a ramp-up in execution.

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