Saudi Water Authority Cancels Yanbu Desalination Project Won by VA Tech Wabag

VA Tech Wabag shares will remain in focus after the Saudi Water Authority cancelled a major desalination project valued at approximately ₹2,400 crore. The customer cited internal reasons for cancelling the Yanbu project through the Etimad electronic procurement platform. Rekha Jhunjhunwala holds an 8.0 percent stake in VA Tech Wabag as of September 2026. The company's shares ended 2 percent lower at ₹2,040.10 apiece on the BSE.

Project Details

VA Tech Wabag won the award in July 2025 to build a 300 million litres per day seawater desalination plant at Yanbu. The company completed formalities and signed the contract before submission for counter-signature. The deal was worth about $272 million or 1.019 billion Saudi riyals. A similar setback occurred in December 2024 when the authority cancelled another 300 MLD project due to internal administrative procedures. Wabag is now approaching the authority for clarity and to decide its next steps.

Financial Health

VA Tech Wabag reported revenue of around ₹1,000 crore and a profit after tax of ₹104 crore in Q2 FY27 with margins at 14.4 percent. CFO Skandaprasad Seetharaman expects FY27 revenue growth at the higher end of the 15 to 20 percent guidance range. The company's order book has crossed ₹20,000 crore, up from ₹7,000 to ₹10,000 crore earlier. Motilal Oswal has reiterated a 'Buy' recommendation on the stock with a target price of ₹2,529 per share, noting strong free cash flow and a net cash position of ₹1,000 crore.

Context

Large infrastructure projects often face cancellations or delays due to shifting government priorities and internal administrative reviews. Water treatment firms like VA Tech Wabag manage such risks by maintaining large, diversified order books across multiple regions.