VA Tech Wabag Limited (NSE: WABAG) Q3 2025 Earnings Call dated Feb. 11, 2025
Corporate Participants:
Rajiv Mittal — Chairman & Managing Director
Skandaprasad Seetharaman — Group Chief Executive Officer
Shailesh Kumar — Chief Executive Officer
Unidentified Speaker
Analysts:
Nidhi Shah — Analyst
Anupam Goswami — Analyst
Tejas Shah — Analyst
Kaushik Poddar — Analyst
Unidentified Participant
Harshal Parekh — Analyst
Jainam Jain — Analyst
Mihir Dhami — Analyst
Mohit Kumar — Analyst
Ashwini Singh — Analyst
Hardik Gandhi — Analyst
Dheeraj Ram — Analyst
Sani Vishe — Analyst
Samarth Khandelwal — Analyst
Presentation:
Operator
Good evening, and welcome everyone to this earnings call post-announcement of Q3 and Nine Months FY ’25 Results of VA Tech Limited. On the call today from the management team, we have Mr Rajiv Mittil, Chairman and Managing Director; Mr Skanda Prasad Siedaraman, Group Chief Financial Officer; and Mr Shailish Kumar, Chief Executive Officer, India Cluster.
Kindly note that during this call, the company may make certain forward-looking statements concerning the business prospects and profitability, which may be subject to risks and uncertainty and the actual results may materially differ from those in such forward-looking statements. This conference call will be archived and a transcription will be available on the company’s website.
The company’s result update presentation has been uploaded on the website and stock exchange, which provides an overview about the core offers and analysis of results for this period. We trust that you had an opportunity to look-through the same. As a reminder, all participant lines will be in listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes.
Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. We will start the opening remarks from the management, post which we will open up for an interactive question-and-answer session. I now hand it over to Mr Mittal to take you all through the key business highlights. Over to you, Mr Mittal.
Rajiv Mittal — Chairman & Managing Director
Thank you. Thank you. Good evening, ladies and gentlemen. We extend a very warm welcome to you all to this earnings call post announcement of Q3 and nine months FY ’25 results of Limited. Your continued support and engagements are crucial to our growth journey and we appreciate your presence today.
Joining me today for this earnings call is Mr Skandhar, our Group CFO; and Mr Salesh Kumar, our CEO for India Cluster. I would like to begin with a great news. India Rating and Research, a Fitch group company has upgraded long-term rating to INDA minus with a stable outlook. This milestone further strengthens stakeholders’ confidence and reaffirms our position as a trusted global leader in water technology.
We continue our growth trajectory into our financial performance over the past nine months, reflecting our focus on delivering profitable growth through expanding our presence in international markets. Strengthening our foothold in industrial segment, advancing our expertise in cutting-edge edge water technology projects, growing our engineering and procurement business, and enhancing our focus on long-term O&M contracts.
Consistent with our strategy, nearly half of this nine months revenue has come from international geographies . Our operation and maintenance business contributed 19% and we continue to maintain a healthy mix — revenue mix of about 70-30 between municipal and industrial segments. As a global leader in advanced water technology, our order intake is primarily focused on desalination, water reuse and recycle effluent treatment projects. With our continued focus on emerging markets and efforts of our agile go-to-market teams, we have secured four significant orders in the last quarter, two from Middle-East, one from Africa and one from India. We have secured a significant consortium order worth approximately 3,251 Indian rupees INR8 crores. For 200 MLD independent sewage treatment plant in Riyadh, Kingdom of Saudi Arabia. This project is being developed by Miyona, company in partnership with and NV Basics essay for Saudi Water Partnership company, the principal offtaker for water and wastewater projects in Kingdom of Saudi Arabia. Is a technology partner and also a leader of consortium will design-and-build the plant, while consortium member Hal Govari, contracting company will undertake the scope of laying the transmission pipeline and construction of reservoirs. We were awarded this repeat order by Myona Company Consortium, a respected client recognizing our four decades legacy in Middle-East, our technically superior proposal and our proven execution capabilities. This order wins — this order win marks another key milestone for us in Saudi Arabia and reinforces our leadership position in Middle-East region. Has further strengthened its O&M portfolio by securing seven years operation and maintenance order worth approximately INR121 crores for Bapco refining industrial wastewater treatment plant in the kingdom of. With this order win, has reinforced its technological excellence and unwavering commitment to deliver world-class water solutions to the oil and gas sector globally. We have secured a prestige — sorry, a prestigious design, build and operate order in Zambia worth approximately INR700 crores from Lusaka water supply and sanitation company. This project is multilaterally funded by the European Investment Bank and KFW of Germany. The engineering procurement and construction phase will be completed in 36 months, followed by 24 months of operation and maintenance. So we have recently also secured an order from Chinnai Petroleum Corporation Limited towards design, engineering, supply, fabrication, installation and commissioning of desalination water pipeline will further strengthen our industrial water portfolio. The project is worth INR145 crores to be completed in 12 months. During our Q2 call, we had informed you all that Wabag is a preferred bidder status for projects worth approximately INR3,500 crores. We are pleased to report that we have already secured 75% of these opportunities into confirmed orders. We remain on-track with our target and expect more orders in the coming months. With a robust order book exceeding INR14,200 crores, we maintain a healthy mix of 58% EPC and 42% O&M projects and a 40-60 split between domestic and international projects. With most contracts having secured payment terms. Further, our strong order book and pipeline visibility instills confidence in our ability to continue to grow and create long-term value for our stakeholders in the years to come. Looking ahead, we are further enhancing our presence and efforts in the emerging markets like Middle-East, Africa, Indian subcontinent, Southeast Asia and CIS countries. I would also like to share some updates on our key projects. Our prestigious 400 MLD desalination project in Chennai funded by Jaika is progressing well. Engineering activities are in the advanced-stage. Deliveries of equipment have commenced and civil work is progressing in-full swing. Year 2024 marked a milestone for Waba as we celebrate our 100th anniversary. We commenced the celebration with a grand event in Vienna in August 2024, followed by mega event in Riyadh in September 2024 and in Delhi in November 2024. The grand celebration to conclude the series of centenary events be held across the world will be hosted in this month-in Chennai, where we will honor our customers, business partners, bankers, stakeholders for their unwavering support. As we move forward, remains steady passed on its commitment to build-on its century old legacy driving excellence in water treatment sector by integrating innovation, cutting-edge technology and strategic resilience, we continue to develop advanced sustainable solution that address the world’s growing water challenges. Our expertise in high-technology water treatment enables us to provide state-of-the-art systems for municipalities and industries, ensuring access to clean water and safe water. With strong focus on sustainability, digital transformation and operational efficiency, we are well-positioned to expand our global footprint, foster long-term partnerships and contribute to a water secure future for generations to come. I extend my sincere gratitude to our investors, partners and stakeholders for their continued trust and confidence in. Your support drives us forward as a global leader in-the-water sector. Now I hand it over to Skandar to take us through the financial highlights. Over to you, Skandar.
Skandaprasad Seetharaman — Group Chief Executive Officer
Yeah. Thank you, Mr Mittal. Good evening, everyone. I hope you’ve had a chance to review our result update presentation, which has been shared on our website and with the stock exchanges. I’d like to reiterate and share the happiness expressed by Mr Mittal about the upgrade of our long-term rating to double AA minus with a stable outlook.
This upgrade strengthens our market perception, increases business opportunities and reinforces stakeholder trust, positioning the company for sustainable growth and success. It is worth noting that we are already rated highest in the short-term rating at A1 plus. We have experienced consistent rating and outlook upgrades over the last four rating cycles, which reflects Babar leadership in-the-water treatment sector, strong revenue visibility, continued focus on profitability and carrying and an asset-light approach.
Before diving into the numbers, I am pleased to highlight that we continue to progress on our profitable growth trajectory with PAT growing at a rate faster than revenue in-line with our long-term strategy. This reinforces the resilience of our business model, our strategic focus on high-margin projects and our disciplined execution approach. Further, with a Strong order book as of December 2024 and robust pipeline visibility, we are confident in our ability to sustain revenue and profit expansion while maintaining our net cash-positive position as we enter the last quarter of this fiscal year. Now let me quickly walk you through our performance highlights. Our consolidated revenue for the nine months ended December 31, 2024 stood at INR2,138 crores, growing over 11% year-over-year. Standalone revenue for the same-period stood at INR1,835 crores. Our consolidated EBITDA for nine months FY ’25 stood at INR289 crores, which grew by around 11% year-over-year. Standalone EBITDA for the nine months stood at INR264 crores. We have successfully maintained healthy EBITDA margins aligned with our medium-term outlook. This is a direct reflection of operational efficiency and disciplined product execution, a well-balanced mix of EV, industrial and international projects and a growing contribution from our high-margin O&M business. Consolidated PAT for nine months stood at INR196 crores with a PAT margin of 9.2%, growing at over 13% year-over-year. Standalone PAT for nine months stood at INR172 crores. As part of our strategy to reduce our exposure in the European region, we had — we have divested three European subsidiaries in the last two years, which has further enabled us to channelize our focus and resources to the emerging markets. On like-to-like basis, excluding European divested entities, our consolidated EBITDA for nine months grew by 14% year-over-year and the consolidated PAT for nine months grew by 17% year-over-year. We are proud to report that Babag has remained a net cash-positive company for four consecutive years and this quarter marks the eighth consecutive quarter of maintaining a net cash-positive position, driven by our disciplined cash-flow management and prudent debt control. As of December 2024, our net cash position stands at INR262 crores, excluding debt on HAM, which is in. Considering the asset-light strategy, our net cash stood at INR379 crores. We closed nine months with a gross cash position of INR659 crores. Our strong cash reserves enable us to infuse necessary funds into projects, expediting execution timelines. You would remember that we have secured the approval of shareholders for borrowing limits up to INR6,000 crores to meet the next wave of growth and order book expansion. We already have bank limits style up for INR4,000 crores, which we expect to increase to INR5,000 crores within this fiscal year. We are currently in final discussions with our bankers and we believe that the credit rating upgrade will further help us in this process. We remain steadfast to our asset-light model delivering return on capital employed of around 18%. We continue to create long-term shareholder value, generating return-on-equity ROE of 14.5%. So with the recent order win of 200 MLD independent sewage shipment plant, the order book now stands in excess of INR14,200 crores and is well-diversified across engineering and procurement, EP, engineering procurement and construction EPC and long-term operation maintenance, O&M contracts. With adequate payment securities, our order backlog is robust and provides clear revenue visibility for the coming years. International business continued to remain robust with 48% of nine months revenues delivered by overseas projects. International projects now constitute 40% of the order backlog, reaffirming strong global presence. Business continues to grow, now making up 42% of the order book, reinforcing our focus on stable long-term revenue streams. We will continue our emerging market focus on advanced technology projects, particularly in desalination, recycle and reuse and affluent treatment. We take this opportunity to express our heartfelt thanks to the bankers, investors, and all other stakeholders for the continued support extended to us. With this, we now open the floor for the interactive question-and-answer session.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question.
Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants, please limit your question to two per participant. If you have a follow-up question, I will request you to rejoin the queue. Ladies and gentlemen, we will wait for a moment while the question queue assembles the first question is from the line of Nidhi Shah from ICICI Securities. Please go-ahead.
Nidhi Shah
Hi, yes. Thank you so much for taking my question. Firstly. Firstly, I’d like to congratulate you on the robust order inflow that we have seen this quarter. And sir, my first question would be the budget. Recently in the budget, it was announced that the mission project will be renewed till FY ’28. Regardless of which we’ve seen minimal activity in this past year in, do we expect any tenders to open up in this space soon? How do we expect this to pan-out first that’s question.
Rajiv Mittal
Okay, a good one. Just to reconform, we had spoken this in earlier quarters also. See directly mission projects is not in our domain area because these are basically rural water supply, which consist of mainly laying thousands and hundreds of kilometers of pipeline. As we have told you earlier that strategically we have moved away from sea.
We are more into engineering and specialized procurement. So this is not a focus area for us unless there are projects where the groundwater which they are extracting or the surface water which they are taking need some advanced treatment, yes, we will take part. But most of the projects are basically borehole, some minimum treatment, disinfection and then laying kilometers of pipeline. So it is not in our direct domain area.
Nidhi Shah
Thank you. My second question would be on the execution on two plants, Chennai and Bangladesh. So Chennai, we can say that the execution has picked-up this quarter. So how do we expect the execution to pan-out for the remaining quarter of the year in FY ’26? And similarly for Bangladesh, you had mentioned on the last call that there were temporary disruptions, but the project is back on-track.
So we saw a lumpy execution of this in Q2. But in Q3, again, we are seeing that the execution is significantly lower. So would we expect the execution of this project to happen in such a manner itself or can we expect these numbers to change in the remaining quarter and then FY ’24.
Rajiv Mittal
Okay. So I — as Mr Salesh Kumar is with us, I would allow him them to respond to your IndiaCluster question.
Shailesh Kumar
So two projects we talked about, one is our big desalination project that we are executing. As Mr said, project is progressing well. We are getting more-and-more robust in terms of project outcomes. On every compartment, we are working well in engineering, procurement and construction. It is in advanced-stage of construction.
So for the next year, the numbers what we have — or what we are talking about, it would be or what earlier we talked about, it would be on that line only. We do not see any change on that. So it is steadily progressing And we are seeing the end-of-the project as we had initially started.
Unidentified Speaker
Coming to Parla project that we are talking, yes, initially we saw some impact because of the geopolitical situation that was emerging there, but we are coming to grips with that. We have tried to overcome that situation. Things are getting normal there. And going-forward, we will be again aligning some derailment, some initial movement away from this expected project schedule was there, but we are getting back on-track. Normalcy is returning and next year we will be getting aligned with the number that we had.
Nidhi Shah
Thank you. Thank you so much for taking my questions. I will join the queue for further questions. Thank you.
Operator
Thank you. The next question is from the line of Anupam Goswami from SUD Life. Please go-ahead.
Anupam Goswami
Hello, sir. Sir, my first question is on the margins. We have seen margins dipping about 200 basis-points from the last Y-o-Y and also Q-o-Q. What could be the reason in this? And going-forward, how do we look at? And also from the execution point-of-view, where do we see execution picking-up now that the order book is pretty much in-full and pretty robust, where do we see the growth in the numbers coming? That is also.
Unidentified Speaker
Okay. Anupam, your first question on margins. We have spoken in the past, I would reiterate we are a project company. Please don’t look at us quarter-over-quarter. There are mix of projects, EP, EBC margins will sway, but we will remain in that window, which we have committed for from a medium-term outlook.
So you’d see the 13% to 15% window remaining clear. You see the nine months number that we have last year to current year, we are at 13.5%. That remains a steady. We have also grown our top-line by more than 10% now. So execution is also picking-up. MR. Just mentioned about the two top projects which are getting into the peak of execution, like in Chennai, the deliveries have commenced, civil work is in-full swing.
Fagla, next year, you will see expansion. You’ve seen us announce the Al-Haya project in Saudi Arabia, that’s a large project which will also start execution. So already you are seeing that the top-line is growing and in the next year, you will see that it will expand meaningfully. I think I’ve answered both your questions.
Anupam Goswami
Sir, I just mentioned next year — next year the execution would be far better. Did you mention — mean that?
Unidentified Speaker
Absolutely, it has to be because we have such a large order book. The revenues will be a consequence because we have to execute these projects within a two, three-year period and all these revenues will pan-out as far as EPC is concerned.
Anupam Goswami
Okay. And given our order book is currently skewed towards international 60%. Do we see a margin in the top range, let’s say, you said about 30% to 15%, do we see about 15% given international order book?
Operator
You. MR. Ranupam, does that answer your question?
Anupam Goswami
Yes. I’ll jump back-in the queue. Thank you.
Operator
Thank you. The next question is from the line of Tejas Shah from Unique Stock Brokers. Please go-ahead.
Tejas Shah
Just wanted to understand on the Bangladesh project. I think the USS top aid towards Bangladesh. Are we affected in any manner in that Bangladesh project?
Rajiv Mittal
Not at all. These are projects which are committed funding from World Bank and committed fundings are not affected by any future decision which US government or anybody will take. None of the multilateral agencies unless there is something very serious governance issue they never cancel the already-approved fundings.
Tejas Shah
Okay and if you can throw some light on that Saudi Arabia order, I think which got canceled for some technicalities, if you can throw some light, I missed out the earlier part of your conversation on your. So if you can throw some light on that and whether we can be able to bag it again or how it is see,
Unidentified Speaker
First of all, there was no order calculation. It was a tender which went into a retendering because the client wanted to change scope, specifications, etc. The tender has been, as we speak, reannounced. We are working on the tender. We’ll have about eight weeks to submit the tender. We will make the submission of the tender and please let us be very clear in our minds, there was no capability issue, there is no technical issue. It was only a customer-related.
Tejas Shah
Okay, great. Thank you.
Operator
Thank you. The next question is from the line of Podar from KB Capital Markets. Please go-ahead.
Kaushik Poddar
Where-is this had nothing in favour of you your company see the recent Delhi election what was talked about and promised by BJP, BJP part BJP is that there will be a that cleaning up of the human riverfront. So is it possible that there can be a big opportunity in such kind of cleaning up of the riverfront?
Rajiv Mittal
It’s not only possible, it is and we are already doing this Yemona cleaning under the action plan, where part of it in Action Plan 1, 2, now three and four will come. We have built plants like Konli, we have built plants like Keshapur, Papankala and recently Ritkala. All this is helping to clean the water in Yamuna by discharging treated sewage rather than untreated sewage in river. This is right in the center of our domain capability and this is the kind of projects we like to work on.
Kaushik Poddar
So what kind of the incremental tender that will be required to do the complete cleanup?
Rajiv Mittal
Yes, nakering it depending on government given up as an man, how much money they allocate for this budgetary allocation of. Whatever they allocate, we will be a strong contender for that
Kaushik Poddar
Okay. And see, we see a lot of contract that you get is from the developing countries, but is it possible that you can go to developed countries and get some orders also.
Rajiv Mittal
[Foreign Speech], it is question of survival in developed countries. [Foreign Speech]. This is they already have the infrastructure developed. Now what incremental you can get some renovation, some upgradation, you don’t get greenfield large projects what you get-in the emerging market where the infrastructure is developing.
So why go to a crowded market with no margins, no scope for innovation. We are very happy with our strategy of remaining in the emerging markets.
Kaushik Poddar
Okay. Okay. Thank you. Thank you.
Operator
Thank you. The next question is from the line of Sabil from Unifi Capital. Please go-ahead.
Unidentified Participant
Hi, thanks for the opportunity and congratulations on the recent order wins. Sir, previously we had called out that we — the Peru Diesel, Pagla, Bangladesh, RIL Indosolar projects, which are largely EPC nature of projects were to be executed in the second-half and we could see that margins have dipped a bit. So how do we think about margin trajectory going-forward from here on?
Rajiv Mittal
I think one of our friends has asked this question, our CFO, replied to that question. Is it something specifically you want other than saying quarter-on-quarter, don’t look at margins because it’s the mix of projects which determine the margin and when you still look at a nine months, we like to be seen as at least two, three-year period company.
But even if you see us as nine months, it is very steady margins. So some quarters nobody will ask us last quarter why did we do well on the margin. Now if 1% or 2% is less in this quarter, we are getting this question. But at least see us on the nine-month period, is our margins not good enough in the range what we had projected to you in the May last year?
Unidentified Participant
Sure, sir. Understood. And sir, second question was on the dividend policy. Sir, if you can elaborate on that part, please.
Rajiv Mittal
We have said in many, many quarters, you are the owners of the company. You are the shareholders of the company. Okay, our shareholders decide what is the best return on capital on their investments they do. As a management because they trust us in our ability, in our judgment, we take a judgment that investing money into the projects is far superior and gives us better return than giving a dividend. That’s been our judgment and that’s how we have worked over the last three, four years.
Now if our shareholders want dividend and say don’t invest into this kind of Namami Gange HAM project, we are fine with it. So it depends where you get a better return on your capital. And you have seen over the last two, three years how the company’s performance has improved on every single metrics, whether it is EBITDA, whether it’s PAT, whether it’s cash, whether it’s ROCE, whether it’s ROE, on all fronts, the performance has improved. And I think we are on the right strategy to give this kind of return to the investors. And hence, we believe
Unidentified Participant
Understood, sir. Thank you in this and the — sorry.
Rajiv Mittal
You wanted to say something?
Unidentified Participant
No, sir, understood.
Rajiv Mittal
Hello.
Unidentified Participant
Thank you so much.
Rajiv Mittal
Thank you.
Operator
Thank you. The next question is from the line of Harshal from Capital. Please go-ahead.
Harshal Parekh
Hi, sir. Thanks for the opportunity. Sir, my question was, I would like to know what is the order bid pipeline where we are the preferred bidders? For example, as of second-quarter, that amount was approximately INR3,500 crores, out of which 75% of them are already confirmed orders. So I would like to know that value as of Q3.
Unidentified Speaker
Yeah, I think even after booking 75% of 3,500, we still fancy our chances to a project in next two, three months in the range of INR2,000 crores to INR2,500.
Harshal Parekh
Okay. Okay, sir. And sir, my next question was that earlier we have communicated that we aspire to grow our revenues by around 15% to 20%. And if I look at our Nine-Month revenue growth, it was around some 11%. So are we still confident of achieving that 15% to 20% growth in FY ’25?
Rajiv Mittal
First thing I want to remind you that these projections were not given for a quarter or nine months or a year. This was given for a medium-term, which is three to four or three to five years in our personal meeting, which we did in May last year. So on that front, we are very, very confident and especially with the kind of order intake we have and the sector which is looking up, I don’t see we need to doubt the projections we have given 3/4 back. So short answer is, yes, we are confident.
Harshal Parekh
Sure, sir. And sir, last final question would be, what would — what is our like-to-like revenue growth on a nine-month basis, excluding the divestment of our subsidiaries.
Rajiv Mittal
I think this is given in our investor presentation.
Harshal Parekh
EBITDA and PAT growth is given, but revenue growth is revenue growth.
Unidentified Speaker
I think it’s about 10%, 11% we have given
Harshal Parekh
So 11% reported growth?
Rajiv Mittal
Yeah, like-to-like revenue growth would be about 13%.
Harshal Parekh
Okay, sir. Thank you.
Unidentified Speaker
Nine months-to nine months.
Operator
Thank you. The next question is from the line of Jain from ICICI Securities. Please go-ahead.
Jainam Jain
Thank you for the opportunity. So, sir, my first question is, could you please give us some details on the recently won 200 MLD Saudi Arabia project, what is the execution timeline and what kind of gross margins can we expect — can we expect from these orders?
Rajiv Mittal
Since the 13 month order execution timeline, we have already taken two months during the limited notice to proceed. Balance, we have 28 months-to execute this visit. And this is a very advanced technology sewage treatment plant similar to the one we did a couple of years back-in Jedda, same technology.
So this is something very new for the Middle-East market and we are very confident after the successful operation of Jedda that is suitable for this climate and the region and that is one of our success factors for this project. This also gives us a very large reference in the GCC market, which is anyway our target market for us and we definitely see that such projects gives us huge exposure and confidence to the clients to consider us for future bidding also.
Jainam Jain
So okay, sir. And sir, what are the payment terms for this contract?
Unidentified Speaker
I think we can take it offline because I will tell you, the payment terms are good because this is funded project. They also know it has to be performed, but you can talk with any of my team because it will take a long-time if I can merit the whole payment terms of this thing, so take it offline.
Jainam Jain
Okay, sir. And sir, my next question is on the 300 MLD Saudi Arabia order, which was canceled in a few months back. So what was the reason for the cancellation? Like was it an operational issue or it has something to do with the? And do we expect the tender to be floated again?
Rajiv Mittal
Yeah, I think you were on the call when one of our friends asked this question and our CFO responded exactly the same questions you are asking.
Jainam Jain
Okay, sir. Sir, what is the order pipeline looking like for India and abroad for Q4 and FY ’26? Like are there any large tenders on the horizon for India? And what is your order inflow guidance for FY ’26.
Unidentified Speaker
We don’t give order inflow guidance. We have already given a guidance for the medium-term on all the parameters. And to get all the parameters, order inflow has to grow at that level. Today, we have said even in today’s con-call that market is very bullish, sector is looking up, we are well-placed. We are even preferred bidder. So in short, I would say it’s looking good.
Operator
Thank you. Ladies and gentlemen, please limit your question to two per participant. If you have a follow-up question, I would request you to rejoin the queue. The next question is from the line of Mihir from Share Khan. Please go-ahead.
Mihir Dhami
Sir, last quarter you had alluded that second-half could see revenues of around INR2,000 crores. So after the 3rd-quarter, do you see pickup in revenues in the 4th-quarter. Significant pickup.
Rajiv Mittal
Yeah, it’s always — our 4th-quarter revenues are always the bumper quarter in all the four quarters, always 4th-quarter is the biggest quarter, and I don’t have any doubt that this year would be no different.
Mihir Dhami
So the guidance which you gave is maintained, right?
Rajiv Mittal
Yeah, obviously.
Mihir Dhami
Okay, all right. Thank you.
Operator
Thank you. The next question is from the line of Ishwar from PMS. Please go-ahead.
Unidentified Participant
Hi, sir. Thank you for taking my question and congratulations on your strong order inflows this quarter. So I would like to know-how much would be the ratio of the bid print we do for orders and how much would we have won? What would be the ratio, sir?
Unidentified Speaker
Basically if I tell you specifically, it is — varies on very conditions, very many conditions that win and bid ratio. But generally, we have 30% to 40% is the range in which we are bagging the order and that is by industry-standard phenomenon. But it depends on very many conditions under which we are building. So it may vary. But generally in that range, we are
Unidentified Participant
Okay, okay. Got it. Sir, can you talk a little bit about the R&D department, what they do because he — the CEO earlier alluded that the emerging market, there is a chance for innovation and plus we have 125 plus IP rights. So is there
Unidentified Participant
Any more in the pipeline now or what is the status of that department? Can you throw some light on that sir?
Unidentified Speaker
I think the departments still exist, they are still live and kicking and doing some good work and they are continuously improving the existing technology, innovating new technologies, commercializing the pilot projects, the indoor prototypes. So this is a continuous exercise. We don’t stop this work. This is a good work. It gives us an edge in the market with advanced technology.
We would like to be considered as an advanced technology, pure-play water company.
Unidentified Participant
I think further, new plan. You’re saying only new IP is in the pipeline. Sorry for interrupting, sir.
Unidentified Speaker
Yeah, it’s always there. We have a R&D director sitting in VNR. He decides which of our developed technologies we need to apply for a patent or IP or a trademark. And accordingly, he is managing that on a day-to-day basis. So it’s not that we have a plan that three IPs this year we will take or 10 IPs will take. He takes a decision based on the type of the project, type of the technologies we do, plus this being a centenary year, we have come up with an initiative called blue seed.
This is to help the new startups with the pre-seed and seed capital to encourage them, develop them not only by giving money, but also sharing with them the water technology, knowledge, help them to perfect their technologies and also help them in commercializing because we are present in 27 countries, so we can also help them in marketing in those countries.
Unidentified Participant
Okay. Great. Thanks a lot, sir, for taking my questions. That’s all I have.
Operator
Thank you. The next question is from the line of Mohit Kumar from ICICI Securities. Please go-ahead.
Mohit Kumar
Yeah. Thanks for the opportunity, sir. And my first question is, have you heard anything on the Mumbai desalination plant? I thought that is the retendered. Is that right?
Rajiv Mittal
Mumbai desalination plant its last three years is off and on. Yes, it’s not the first time it’s going to be retendered. I hope they will find some interest in it, the way they have structured it. But as of now, the way they have structured it, there are no for that. So we have to wait-and-watch how does it develop.
Mohit Kumar
Understood, sir. My second question, sir, of course, you have done very well in the — in the Middle-East, but the Indian opportunities looks like to be very, very low. So are you seeing the pipeline for the Indian project building up? And are you hopeful that some of the new orders, especially on the Namami Gange 2.0 will likely to take-off in FY ’26.
Rajiv Mittal
So surely it has to take-off. What we have seen so-far is just the tip of the iceberg because it’s only we have worked on our as a river, but we have huge river of fronts, which we have to work on and the government has made it very clear what they have started as a good pilot with Ganga. They would extend this to all the rivers whereas, Krishna, it’s Putra, whatever, they are going to extend the same model to all rivers.
Just imagine if they are extending to all these rivers and also it was announced in the interim budget 100 cities, we are going to extend this HAM model, which they will make sure they are bankable projects. I think the — there is no dearth of opportunities, as I said before, is enough in this water sector, which is looking up and we remain very bullish about it.
Mohit Kumar
But can I see things in the medium-term, few tenders getting closed in India, large tenders?
Rajiv Mittal
Yeah, why not? Keep your fingers closed? Yes, it will open.
Mohit Kumar
Understood. Thank you and all the best, sir. Thank you.
Operator
Thank you. The next question is from the line of Ashwini Singh from Statro Fintech Private Limited. Please go-ahead.
Ashwini Singh
Yeah, hello, good evening, sir. Congratulations on your fantastic results. I had two questions, but you have already answered one. So just one question. So I would like to know what is the goal of Aubag and where do you see yourself in three to five years’ time in terms of business value, in terms of international expansion and in terms of your business in India.
Rajiv Mittal
Yeah, we. So what is the goal of this? See, I’ll let me tell you and share — maybe take this opportunity to share a new vision statement, which we have given to our colleagues in because it’s 100 years we have talked about as a responsible water company conserves water. That is a responsibility we have given to ourselves that means do everything to make sure this limited resource, which we all consider is unlimited, which is not true is cement.
It’s a very limited resource water we should conserve it. That’s the first target we have given to ourselves. The second we have said is protect environment because if we do the proper treatment, we use the right technology, we use the green technology, we don’t emit out greenhouse gases, all these things if we do well, we are protecting the environment.
That’s the second target we have given to ourselves. Third, we all have not realized what is the importance of water for a growing economy, for our GDP growth. That is another emphasis we have brought in. We have said we are the guys who are going to power the economy. How you are going to power the economy by making sure water is available to commercial and industrial units, uninterrupted, reliable water source at affordable price. This has been our mantra. So that is what is our contribution to the society.
Ashwini Singh
Thank you, sir. Thank you.
Operator
Thank you. The next question is from the line of Hardik Gandhi from HPMG Shares and Securities. Please go-ahead.
Hardik Gandhi
Hello, sir, am I audible?
Operator
Yes, sir.
Hardik Gandhi
Yes, sir. Congratulations on a good set of numbers. Just one single query on the big order, which we received from Saudi Arabia. So here the orders number is INR3,251 crores. So just a small question on that, that is the whole or INR3,251 crore of that will be coming on our books or will we be — is that the contract and we’ll be distributing that amount with our other partners who is forming the pipes and infrastructure on the side?
Rajiv Mittal
Okay. Obviously, we have mentioned that it’s a consortium order, it’s not a order and the other partner is a partner, not a subcontractor. So his revenues will not pass-through our books. Neither we want it that way that it’s a pass-through our books and just to show our top-line, we have organized that his revenues will be in his book.
Our revenue will be in our book. Our order what will be passing-through our books will be about, 175 or something, right. So 17 1,7125 will be passing-through our books and rest of it. So about 55-odd percent should pass-through our books. Understood. Yeah, that’s just what I wanted to know.
Hardik Gandhi
Thank you so much, sir. That’s it.
Operator
Thank you.
Rajiv Mittal
Welcome.
Operator
The next question is from the line of Diraj Ram from Ashika Institutional Equities. Please go-ahead.
Dheeraj Ram
Hi, sir. Thank you for taking my question. Sir, in recent times.
Operator
Sorry to. I would request you to please use your handset.
Dheeraj Ram
Sure. Okay. Am I clear now?
Operator
Yes, sir.
Dheeraj Ram
Thank you for taking up my question. Sir, in recent times, there are few listed companies who are making close to 25% EBITDA margin and they are in similar segment what we do. So I understand what can be the take on these. And I would like to understand what’s your take.
Rajiv Mittal
See, I can — it’s on a lighter side, my friend. We have to learn from this company. In my 41 years carrier, we have not seen this kind of thing. So maybe they are doing something which we are not aware of. So maybe they have to answer what they do to make this kind of thing. I think in our business, if you make around, 14% 15% EBITDA, we are doing well with generating free-cash flow. That is our aim.
Operator
That is our target. We are fixed to it. We don’t look at what others do. I think it’s their business, they know what is their business model.
Dheeraj Ram
Got it, sir. Got it. I understand we have plenty of opportunities in Saudi Ara India and countries. But in US, there is something called EFAS initiative that is in government as we only are collab are grabbing a lot of orders there. So can we expect also going to bid for those projects anywhere in future.
Rajiv Mittal
If you’re talking about US, no, we have been very clear and very focused on the direction we want to go and that we will have no change of mind. There is no requirement to change the mind because the business opportunities in the emerging world is tremendous. It’s — this developed world, I think we want to stay away from till there is a need that we need to go, as of now, there is no need that we go to the developed world.
Dheeraj Ram
Got it, sir. Thank you.
Operator
Thank you. The next question is from the line of Gupta from Mendreva Global Capital. Please go-ahead.
Unidentified Participant
Hi, sir, thank you for the opportunity. I just wanted to ask a question on the O&M part. So since the O&M would be a recurring kind of revenue, right, due to the EPC book. So will the margins on the O&M side be higher? Like I understand your guidance for the medium-term, but typically, what are the margins of the O&M side after you are done with the increase?
Unidentified Speaker
Yeah, I’ll take this question. As you rightly said, O&M is a different business, not like EPC, lesser risk. And as told you, it is a — we have a good mix of O&M and EPC and that makes the business sustainable. As far as margin is concerned, rightfully said, it is more predictable, more in grid.
So margin would be slightly higher than the normal EPC and that is the way we are performing over the years and we foresee that the similar trend will continue to do. It is definitely better than.
Unidentified Participant
Got it, sir. Got it. Thank you. And all the best.
Operator
Thank you. Ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Sani from Axis Securities. Please go-ahead.
Sani Vishe
Yeah. Thanks for taking my question. So my question is a little subjective. I don’t expect a definitive answer to, but we see that there is a lot of order inflow. But are there any concerns on Wabak side, how much you can execute in a particular quarter? Is there an upper limit given that resources like human capital or whatever you need? So is there any consent on that end?
Rajiv Mittal
I would say not at all. If there is a concern, we will not even book the order. It’s unfair for a customer that we take the order and don’t execute it or don’t execute it on-time until to the requirement what we have signed the contract. So-far, we have grown from a company from a startup to what we are today as a globally number three.
So we have always grown with the orders and we believe that we have enough strategy in-place in recruiting and hiring people, training people, developing them under the knacks, naps, all schemes which government has given us, we do run almost like a university to train water engineers.
And so-far it has worked for us and we are very confident going-forward, it will work. One more thing, I’ll leave it for your digestion. See as the size — ticket size of the orders are going up, the number of manpower required to execute a order is definitely coming down or per million revenue, the manpower required is definitely coming down.
So this is also helping us to focus on few large orders rather than 10s of small orders. This is also making it more efficient and profitable for us.
Sani Vishe
Okay. So the only risk-on execution side is possible delays on approval from customers or unforeseen in situations which are not equal to the business operations. Is that correct?
Rajiv Mittal
Let’s have a separate session on risk. I don’t think we can count in our fingers what are the possible risks. It’s not about risk. Life is full of risk, it’s your ability, your experience, your past track-record in managing this risk. Risks are the only thing you can count on your fingers. There are many, many risks, especially in project business. So the work of a company is managing the risk and mitigating those risk.
Sani Vishe
Fair enough. Thank you, sir.
Operator
Thank you. The next follow-up question is from the line of Anupam Goswami from SUD Life. Please go-ahead.
Anupam Goswami
Sir, one question. What is the peak order book that we can go before we stop taking any orders over there is one. And are we selecting or choosing our order? And what are the criteria do we look for where we filter out the order intake?
Rajiv Mittal
[Foreign Speech]. So naturally, there’s no limit to which we can go and stop taking orders. It’s — that’s not the DNA of Wabag. As we said earlier, we have grown from a start-up to where we are and from now to grow where we want to grow, I think we are aggressive, we’ll remain aggressive, but very disciplined.
And that’s your second part of your question, what is the criteria you select. Like we have told you a few years back that we don’t take state government-funded orders. That’s one example. We go for multilaterally funded orders. We go for orders which have payment security. We go for orders which have a good cash-flow.
We go for orders which have an advanced technology, we go for orders which have operation and maintenance revenue. So these are some of the criterias which has been given to our sales and marketing guys. They select the project-based on that, not based on the size of project or anything.
We remain very disciplined. If something we have to let go, we let go like Mumbai projects. We decided to let go. We worked on it for 11 years, but we decided to let go because it did not fit into the screen what we have kept, it did not pass-through the screen. So I would say, yes, we have a capacity. Yes, we can build further capacity. There is no reason to say no to a order which fits into our screening criteria.
Anupam Goswami
And sir, what is the internal IRR that we look for out of this order?
Unidentified Speaker
We work on EBITDA basis. We don’t work on IRR that we have given you already 13% to 15% and 9% to 10% at PAT level. This we will maintain.
Anupam Goswami
And sir, last, rest of the — in rest of India, the order book where we see a sharp drop-in margins as well as how do we see the pipeline building up over there? And since we have seen a robust Saudi and Middle-East orders, how much of a sustainability can we expect out of this? That is also.
Unidentified Speaker
So your question is not at all-clear to me at least. Can you be very specific what you want to know?
Anupam Goswami
Yes, sir. Sir, I wanted to know on the export orders, how — what is the run-rate or what is the pipeline that we see? Have it build-up from what we have seen right now, it is pretty robust. But going-forward, how do we see it?
Rajiv Mittal
See, we are in the emerging markets. As we said, where infrastructure is required, urbanization is happening. So pipeline is robust, will remain robust for the decades to come, I don’t even say years to come, for decades to come. It will remain robust.
Operator
Sir, does that answer your question?
Anupam Goswami
Yes. Thank you.
Operator
Thank you. Before we take the next question, a reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Sam Rat from ICICI Securities. Please go-ahead
Samarth Khandelwal
Hello, am I audible?
Operator
Yes, sir.
Rajiv Mittal
Yes, little louder.
Samarth Khandelwal
Yes, sir, firstly, congratulations on a good set of numbers for this quarter, especially where there was a kind of capex guy up in the Q2. My question is on the order that was canceled. I heard that the newer tender has opened up and we have eight weeks to apply. So if you could just share some color on the scope of the new tender that has come, will it be the bigger size or what has exactly changed?
Rajiv Mittal
See, it just came a few days back. Our team is reviewing the scope and the changes. It’s too early to give you what maybe another week, 10 days you give up and after we have reviewed, our teams have analyzed it, we can share that differences.
Samarth Khandelwal
Okay, so second question is, I understand that we are shifting from an engineering procurement and construction company to only engineering and procurement company. But we still are into construction of a few orders. So on those orders, do we have a price escalation clause built-in in the contracts that we enter or are we exposed to all this?
Rajiv Mittal
Because our contracts are always long-term contracts, especially in India. Anything more than 18 months, we always have a price escalation built-in where the Government of India RBI indices will be the basis and that more or less covers about 70% 75% of our cost as well.
Samarth Khandelwal
And sir, lastly, just one clarification on the consortium order that you have received in our scope. Is there any part of construction that you are doing or it is entirely in engineering and procurement?
Rajiv Mittal
No, no. The treatment plant, we will do the construction within a boundary of our treatment plant. Anything outside the treatment plant boundary, which is laying of pipelines, constructing of reservoirs, we don’t get-in there because of all the issues of getting permissions right-off way. So we don’t do that, that is what our partner is doing. We will limit ourselves within the bombing.
Samarth Khandelwal
Okay. Understood, sir. Thank you. Thank you for answering my questions.
Operator
Thank you. Thank you. As there are no further questions, I would now like to hand the conference over to Mr for closing comments.
Rajiv Mittal
Thank you once again. And friends, thank you for your active participation in this Q3 and nine months FY ’25 earnings call. We have uploaded the analyst presentation in our website. In case you have any further queries, you may get-in touch with our IR team or you can also feel free-to get-in touch with us directly. Thank you once again. Enjoy the evening.
Operator
On behalf of VA Tech Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines