Water Sector

Water Sector Overview

The note covers water and wastewater treatment, desalination, irrigation, water infrastructure and related equipment companies. It points to public programmes and water scarcity as demand drivers, while noting that project awards, funding and execution vary across schemes and businesses.

• Market growth: India’s water and wastewater treatment market is expected to grow at a CAGR of 6.2% from 2023 to 2033, to $23.8 Bn. from $13 Bn. South India is expected to lead sector growth; the note cites water scarcity affecting 40% of India’s population.
• Jal Jeevan Mission: The Union Budget FY25-26 enhanced the mission’s outlay to INR 67,000 Cr. and extended the timeline till 2028, with the aim of providing 100% portable tap water connections to rural populations from ~80% coverage.
• AMRUT 2.0: The programme has an indicative outlay of INR 2,99,000 Cr., including Centre share of INR 76,760 Cr. for 5 years. As on 15-Nov’24, 4,916 of 8,998 approved projects, worth INR 85,114 Cr., had been awarded.
• Namami Gange and irrigation: Till 31-Dec’24, 303 of 488 Namami Gange projects had been completed and made operational. PMKSY-AIBP has an outlay of INR 93,068 Cr. for 2021-26; irrigation potential of 25.80 Lakh Ha had been created against a target of 34.63 Lakh Ha during 2016-17 to 2023-24.
• Pumps: India’s pump market was $3.7 Bn. in 2023 and is expected to reach $5.25 Bn. in 2030, a CAGR of 4.5%. The note says 16% of India’s pump manufacturing potential is export-oriented.

Water Sector Findings

• Order books differ widely: The report’s company comparison lists order books from INR 500 Cr. for Effwa Infra to INR 14,500 Cr. for Welspun Enterprises. Some profiles do not state an order book.
• Growth profiles vary: FY22 to FY24 revenue CAGR in the summary table ranges from (2%) for VA Tech Wabag to 178% for Taylormade Renewable.
• Debt and working capital need attention: The summary table reports 6M-FY25 debt/equity ranging from 0.00x for Denta Water to 1.05x for Enviro Infra Engineers. NWC days range from 36 for Enviro Infra Engineers to 305 for Vishnu Prakash.
• Policy schemes provide project context: The report outlines Jal Jeevan Mission, AMRUT 2.0, Namami Gange and PMKSY-AIBP allocations, awards and progress as relevant sector developments.
• Profiles are Unrated: Each company profile states Recommendation: Unrated, with Target Price and Potential Upside shown as NA.

Sector Risks

• Project execution and tendering: Company profiles identify tender competition, aggressive bidding and project execution timelines as factors that may affect margins and delivery.
• Working capital and collections: Profiles repeatedly flag milestone-based billing, retention money, municipal receivables, delayed work certification and payment releases.
• Scheme funding and awards: The industry update gives project-award and fund-utilisation figures for government programmes; company profiles also cite state funding constraints and delayed payments.
• Input costs: Steel and other input-price changes are identified in company profiles as potential pressures on operating margins.

Our View

The note presents policy programmes and projected market growth alongside a diverse set of companies with differing order books, growth, leverage and working-capital profiles. It does not give a sector-wide recommendation; all company profiles are marked Unrated, with no target prices or potential upsides stated.

Standard disclosures

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• Nature of financial interest in subject company, if any –Nil
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Regulatory disclosures

Minerva Capital Research Solutions is an independent investment advisory firm founded by Nishant Gupta(SEBI registration no. INH000018896).

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Rating rationale

Minerva Capital Research Solutions endeavors to provide objective opinions and recommendations. Ratings are assigned to stocks according to their fair value vs current market price and then categorizes them as Buy, Hold, Reduce, Sell. The performance horizon is one year unless specified and fair value is defined as analyst’s valuation for a stock.

• Buy:> 15%
• Hold: -5% to 15%
• Reduce: -15% to -5%
• Sell: <-15%