This value chain can be broadly divided into three parts: upstream, midstream, and downstream.
Upstream includes water sourcing and infrastructure, such as companies involved in creating pipelines, pumps, and filtration systems. Midstream covers the treatment of water, where companies focus on purification and desalination technologies. The downstream segment includes water distribution, wastewater treatment, and recycling services.
Governments worldwide are prioritizing water management through projects like the Jal Jeevan Mission in India that aim to provide safe drinking water to all households. Additionally, policies around industrial water recycling and reducing water wastage have gained traction, offering growth opportunities for companies in the sector.
Let’s look at these segments in detail and understand their growth prospects.
Stocks involved in water treatment and desalination
Water treatment and desalination are crucial processes in the water system value chain. Water treatment involves purifying water from natural sources or wastewater to make it safe for drinking, industrial use, or agricultural needs.
Here are the companies involved in this sector that are taking some serious efforts.
#1 Welspun Enterprises Ltd
Welspun Enterprises is a key player in infrastructure development, with a focus on the road, water, and wastewater sectors.
The company has significant investments in water infrastructure, including large-scale projects like the water supply to 2,544 villages in Varanasi, Ayodhya, and Meerut, valued at ₹2,900 crore.
Welspun is also leading the development of a 418 MLD wastewater treatment facility in Dharavi and a 2,000 MLD water treatment plant in Bhandup, Mumbai, estimated at ₹4,120 crore.
The company’s order book includes ₹9,630 crore in water-related projects, with major projects like the tertiary treated water conveyance tunnel for BMC valued at ₹1,990 crore.
Welspun Enterprises’ strategic approach to bidding for high-value projects positions it as a leading player in India’s water infrastructure.
Coming to its financials, the company has reported a 25% increase in consolidated income for first half of FY25, reflecting solid growth.
Looking forward, the strong order book and focus on urban infrastructure present significant growth opportunities for Welspun in the coming years.
#2 VA Tech Wabag Ltd
VA Tech Wabag specializes in water treatment solutions, including water and wastewater treatment plants, desalination, and wastewater recycling.
The company focuses on providing EPC services for large-scale municipal and industrial water treatment projects, with a strong presence in India and international markets, particularly in the Middle East, Africa, and Southeast Asia.
Recently, the company secured significant orders, including a major sewage treatment project in Chennai, which will enhance its position in the domestic market.
VA Tech Wabag is currently focusing on increasing its market share in the growing desalination sector, which is driven by water scarcity concerns.
Coming to its financials, the company’s sales have grown at a CAGR of 2.2% in the last five years driven by a strong order book. A low revenue growth is primarily due to slow order execution.
The company’s net profit has grown at a CAGR of 24.4%. Its profitability was slightly affected by high commodity prices. However, it bounced back strong in the financial year 2024 primarily due to its improved pace of order execution.
Being a well-established player in the water infra business, the company has a competitive edge over its peers. It has a diversified client base across municipalities and industrial businesses across India and several countries.
#3 EMS Ltd
EMS is a Delhi-based multi-disciplinary EPC company specializing in providing turnkey services for water and wastewater treatment, sewage management, and water supply systems.
The company’s water infrastructure division is dedicated to delivering complete solutions for water and wastewater treatment plants (WWTPs), including sewage treatment, water treatment, and effluent treatment systems for government and municipal bodies.
EMS focuses on projects funded by national and international agencies like the World Bank and under schemes such as Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and the National Mission of Clean Ganga (NMCG).
Recent developments include the acquisition of a 75% stake in Brijbihari Pulp and Paper, expanding its operational reach. EMS has also been expanding geographically, securing projects in new regions such as West Bengal, Jharkhand, and Karnataka, alongside its strong presence in Uttar Pradesh and Rajasthan.
The company projects a revenue growth of 25%-30% for FY25, driven by its expanding order book, which now stands at ₹1800 crore, with a bid pipeline of ₹4,000 crore.
Financially, EMS has reported steady growth, though cash flow from operations remains a challenge. The company is well-positioned for growth in the water sector as urbanization and government initiatives drive demand for water and wastewater management solutions.
#4 Ion Exchange (India) Ltd.
Ion Exchange (India) is a leading provider of integrated water treatment solutions. The company offers a wide range of services, including the construction of water and wastewater treatment plants, and the provision of chemicals, resins, and specialty solutions.
Notably, the company has been involved in large desalination projects and wastewater treatment initiatives, with over 100,000 installations globally.
Ion Exchange has also been expanding its global footprint, with significant projects in Sri Lanka and increasing demand for desalination plants.
The company has recently expanded its order book, reaching ₹3,400 crore in FY25 so far, with a bid pipeline of ₹8,200 crore.
Ion Exchange’s revenue and profitability have been strong, with a 20% YoY growth in H1 FY25. The company expects continued growth in its water infrastructure business, especially with increased demand for seawater desalination and water treatment solutions.
#5 Triveni Engineering and Industries
Triveni Engineering is a diversified conglomerate involved in sugar, ethanol, engineering, and water solutions. Based in Uttar Pradesh, the company is among India’s largest sugar manufacturers and a leading supplier of ethanol.
Its water infrastructure division plays a vital role, focusing on water and wastewater treatment through turnkey solutions. Triveni has successfully executed over 100 projects in both municipal and industrial segments, treating more than 12,000 MLD of water.
In recent developments, Triveni is expanding its water capabilities, with a ₹25 crore project expected from Europe. The company is also investing in other segments, such as ethanol production and power transmission.
Its engineering arm reported a robust 30%+ growth in Q2 FY25, and it secured a significant order in the defence sector.
Triveni’s future growth prospects look solid, driven by expansion in sugar production capacity, increased ethanol output, and a focus on water infrastructure.
The company has already announced investments of ₹18,000 crore to enhance power transmission and defence capabilities.
In terms of financials, Triveni’s revenues for H1 FY25 were ₹2,790 crore, marking a 7.1% increase, while its profit before tax stood at ₹120 crore.
Stocks involved in water treatment chemicals
Water treatment chemicals are substances used to treat and purify water, removing impurities and ensuring safe water for consumption and industrial use.
These chemicals include coagulants, flocculants, disinfectants, pH adjusters, and scale inhibitors, among others.
Let’s take a look at the listed companies operating in this segment…
#1 Sicagen India
Sicagen India, established in 2004, operates in diverse sectors including building materials, power and control systems, industrial packaging, specialty chemicals, and boat building.
It is a key supplier of high-end chemicals for industrial water treatment, focusing on applications that improve manufacturing and process efficiency.
Sicagen is also part of the $2 billion AM International group, with subsidiaries in cable manufacturing and precision engineering. Recently, the company proposed to amalgamate its wholly owned subsidiary, Danish Steel Cluster, to streamline operations.
Sicagen has a balanced geographical revenue split, with exports contributing approximately 51% and the rest from domestic sales.
With a strong focus on international markets and new innovations, Sicagen is set to benefit from expanding water infrastructure projects and industrial needs.
#2 Chembond Chemicals
Chembond Chemicals is a leading manufacturer and supplier of specialty chemicals, offering products across various industries such as construction, water treatment, biotech, and material technologies.
The company specializes in metal treatment, water treatment chemicals, industrial enzymes, and high-performance coatings for structural protection.
Recently, the company has expanded its product range, strengthening its position in water infrastructure and environmental sustainability. Chembond operates several manufacturing plants in India and has overseas subsidiaries in Malaysia and Thailand.
#3 Fineotex Chemicals
Fineotex Chemicals, established in 1979, specializes in manufacturing auxiliaries and specialty chemicals for diverse industries such as textiles, construction, water treatment, and fertilizers.
Its water treatment division focuses on producing chemicals for industrial water treatment, including oil-based and water-based drilling fluid chemicals.
Recently, the company made notable progress with its acquisition of Biotex Malaysia. Fineotex’s growth prospects are strong, with strategic investments in R&D and expansions in production capacity, including a new plant at Ambernath set to increase output in the coming year.
For the second quarter of FY25, Fineotex reported a consolidated revenue of ₹150 crore, marking a 3% growth from the previous quarter, with a PAT increase of 10% to ₹3.21 crore.
The company is well-positioned for future growth, driven by both domestic and international demand for its diverse product range.
Stocks involved in water supply pipes & pumps
Water supply pipes and pumps are essential components in the distribution of water for residential, commercial, and industrial purposes.
Pipes transport water from treatment plants to end-users, while pumps are used to move water through pipelines, ensuring consistent flow and pressure.
Here are the companies involved in this segment…
#1 Welspun Corp
Another company from the Welspun group, Welspun Corp is one of the largest manufacturers of large diameter pipes globally, offering a diverse range of products, including steel billets, TMT rebars, ductile iron (DI) pipes, stainless steel pipes, and tubes.
In FY24, the company’s DI pipe sales volume rose by nearly 10x year-on-year to 135 KMT (kilo metric tonnes), reflecting the growing importance of water infrastructure in India.
The company also plans to set up a 150 KMTPA (kilo metric tonnes per annum) DI pipes manufacturing facility in the Middle East with an investment of approximately ₹500 crore.
A major development for the company has been the acquisition of Sintex-BAPL, which has allowed WCL to expand into the plastic pipes segment, adding to its water solutions portfolio.
#2 Roto Pumps
Roto Pumps is a leading manufacturer of progressive cavity pumps and other specialized pumps used across a wide range of industries, including wastewater, oil and gas, chemicals, and food and beverages.
The company recently expanded its product line, starting commercial production of submersible helical rotor pump sets and solar pumping systems through its subsidiary, Roto Energy Systems. These developments highlight its focus on renewable energy and water-related projects.
Roto Pumps’ global presence spans over 55 countries, with expansion into the Middle East and North Africa (MENA) region, further boosting its reach.
#3 Shakti Pumps
Shakti Pumps is a leading manufacturer of pumps, motors, and controllers, offering advanced solutions for a variety of applications, including irrigation, horticulture, and domestic water supply.
The company has a strong presence in the water infrastructure sector, particularly in the solar pump market.
Shakti Pumps is a key player in the PM KUSUM scheme, holding a significant market share in domestic solar pumping solutions. In addition to its traditional water pumping business, Shakti Pumps has ventured into the electric vehicle (EV) segment.
Shakti Pumps has secured significant contracts in recent months, including a ₹290 crore deal from the Uganda government for solar-powered water pumping systems. Shakti Pumps is also enhancing its manufacturing capabilities, with a capacity to produce over 5 million pumps annually.
Financially, the company has shown impressive growth, with Q2 FY25 revenue reaching ₹63.4 crore, a 315% increase YoY, and PAT of ₹10.14 crore, reflecting strong margins and future growth potential.
#4 Kirloskar Brothers
Kirloskar Brothers is a prominent player in the engineering and manufacturing sector, specializing in fluid management systems.
Its core business includes providing solutions for water supply, power plants, irrigation, and other large infrastructure projects, along with pumps, valves, motors, and hydro turbines.
Recent developments include Kirloskar’s execution of major irrigation projects across India and securing orders from high-profile projects like AIIMS Jammu and Kanpur Metro.
The company also made substantial investments in its subsidiary, Kolhapur Steel, and is focused on addressing offshore applications with specialized products for markets such as Oman.
With strong growth prospects, Kirloskar Brothers is aiming for a double-digit revenue growth in FY25. The company is also working on advanced projects, such as developing pumps for nuclear power plants and capitalizing on opportunities from the UK’s AMP8 program.
In Q2 FY25, the company reported a 13.4% YoY increase in consolidated revenues, reaching ₹1,040 crore, and a 90% growth in PAT.
#5 Hariom Pipe Industries (HPIL)
Hariom Pipe Industries, established in 2008, is a vertically integrated steel manufacturer with a diverse portfolio of over 800 SKUs, including products like sponge iron, MS billets, HR strips, MS tubes and pipes, scaffolding, and galvanized pipes.
HPIL operates manufacturing units in Andhra Pradesh, Telangana, and Tamil Nadu, with a capacity of 701,232 MTPA, producing a wide range of steel products.
In recent developments, HPIL acquired M/s Ultra Pipes for ₹402 m, adding MS tubes capacity of 84,000 MTPA. The company also raised its authorized share capital to ₹50 crore in September 2024 and plans to raise ₹700 crore through a qualified institutional placement (QIP).
The company aims to reach ₹2,500 crore in revenue by FY26, driven by an anticipated increase in demand, especially in the infrastructure sector.
#6 Tata Metaliks
Tata Metaliks, incorporated in 1990 as a subsidiary of Tata Steel, is one of India’s leading producers of high-quality Pig Iron (PI) and Ductile Iron Pipes (DIP).
Recently, Tata Metaliks has been expanding its DIP capacity, with a new plant underway in Kharagpur, aimed at increasing its capacity to 450,000 tonnes per annum by FY 2024-25.
This expansion will help the company capture a larger share of the growing demand for water infrastructure.
#7 WPIL
WPIL has established itself as a comprehensive solutions provider in the pumping systems and water infrastructure sector, offering end-to-end services from concept to commissioning.
The company’s water infrastructure portfolio is notable, encompassing major irrigation projects such as the Kaleswaram scheme where they’ve successfully commissioned multiple 30MW metallic volute pump turbines.
A significant strategic development has been the divestment of their nuclear business units in France and Switzerland to Newcleo for ₹620 crore, allowing them to concentrate on their core water and industrial pump operations.
The company’s growth trajectory is underpinned by a robust order book, with domestic projects valued at ₹2,730 crore and international orders worth ₹530 crore spread across strategic markets in Italy, South Africa, and Australia.
The company has been actively exploring expansion opportunities in North America while strengthening its existing global presence.
Coming to financials, its revenue reached ₹490 crore in the second quarter of FY25, accompanied by an impressive EBITDA margin of 21.3%, marking a substantial 54% year-on-year growth.
Stocks involved in water sewerage
Water sewerage refers to the infrastructure and systems used to collect, transport, treat, and dispose of wastewater from homes, businesses, and industries.
It includes underground pipes, pumping stations, treatment plants, and disposal systems that handle both domestic sewage and stormwater.
In India, the water sewerage sector faces significant challenges. Only about 40% of urban India has access to a sewerage network, and even less in rural areas. The government has launched several initiatives like AMRUT (Atal Mission for Rejuvenation and Urban Transformation) and the National River Conservation Plan to improve this infrastructure.
The sector presents a huge opportunity, with estimates suggesting India needs investments of about ₹2.5 trillion to achieve universal sewerage coverage in urban areas by 2030.
Here are the companies involved in this space…
#1 NCC
NCC is a diversified construction and infrastructure development company that executes turnkey EPC contracts across various sectors including buildings, roads, irrigation, and water projects.
In the water infrastructure segment, they specialize in constructing water supply projects, treatment plants, distribution networks, underground drainage systems, and lift irrigation schemes, with significant involvement in the Jal Jeevan Mission projects worth ₹6,000 crore.
A notable recent development is their entry into the Smart Meters segment, securing three projects valued at ₹8,080 crore, with field trials already underway in Bihar and planned for Maharashtra.
The company’s growth trajectory looks promising with a substantial order book of ₹52,370 crore and a prospective project pipeline exceeding ₹2.1 trillion, spanning across multiple sectors and states.
The company has posted strong financial performance in Q2 FY25, reporting consolidated revenue of ₹5,190 crore with an improved Ebitda margin of 9%.
#2 Om Infra
Om Infra is a diversified infrastructure company primarily focused on hydro-mechanical equipment, steel fabrication, and turnkey solutions, with additional interests in real estate and hospitality.
The company’s core strength lies in its water infrastructure business, where it specializes in providing end-to-end solutions for hydropower and irrigation projects.
The company has established itself as a significant player in the Jal Jeevan Mission, which comprises about 50% of their current order book of ₹2,140 crore.
Recent developments include strategic asset monetization efforts, with plans to generate ₹700 crore from non-core real estate assets and expected arbitration awards of ₹640 crore from various projects, including the Bhilwara Jaipur Toll Road project.
The company has provided guidance for annual revenue between ₹8,500 crore and ₹1,000 crore, with targeted Ebitda margins of 10-12%.
#3 Felix Industries
Felix Industries specializes in comprehensive water and environmental solutions, emphasizing recycling, reuse, and reduction.
The company’s core focus is on water and wastewater management, offering advanced systems such as Zero Liquid Discharge, Reverse Osmosis, Nano-Filtration, and Effluent Recycling. It also provides water cycle management services.
Additionally, Felix Industries has a significant presence in industrial piping, trading thermoplastic pipes and accessories, and in e-waste recycling, handling the entire lifecycle from collection to material recovery.
The water infrastructure segment remains central to Felix Industries’ operations, leveraging a portfolio of over 450 proprietary technologies for applications across water infra.
#4 RPP Infra Projects
RPP Infra Projects has established itself as a comprehensive infrastructure development enterprise since its inception in 1995, specializing in critical infrastructure segments including highways, water management systems, and civil construction.
The company’s strategic realignment towards water infrastructure has yielded significant results, with this segment now contributing 76% of revenue, marking a substantial increase from 22% in the previous fiscal year.
In a notable strategic expansion, the company has diversified its portfolio by securing a 20-hectare land parcel in Sri Lanka for a 10 MW solar power installation through its subsidiary, signalling its entry into the renewable energy sector.
The company maintains a strong market position with a substantial order book of ₹3,200 crore, strategically distributed across infrastructure (48.8%) and water management (43.9%) sectors.
Stocks involved in hydro mechanical components
Hydro-mechanical components are critical in hydropower and irrigation systems, ensuring efficient water management and energy generation. These components include gates, valves, hoists, and penstocks, which regulate water flow, pressure, and storage in dams, canals, and hydropower plants.
Here are the companies operating in this segment…
#1 Jash Engineering
Jash Engineering specializes in manufacturing equipment for water intake systems, wastewater management, and other industrial applications.
The company offers end-to-end solutions, including design, casting, fabrication, assembly, and testing, making it a one-stop provider for water infrastructure needs. Water control gates account for the majority of its revenue, followed by screening equipment and valves, reinforcing its leadership in the water management sector.
Jash exports its products to over 45 countries and is among the top five global players in water control gates.
Some of its recent milestones include acquiring an 80% stake in Waterfront Fluid Controls (UK), expanding its global reach. The company is investing ₹70-75 crore to enhance capacity, with a new plant in Chennai set to begin operations soon.
Additionally, it launched India’s first indigenously manufactured disc filter machine in collaboration with INVENT of Germany.
With a strong order book, Jash Engineering is targeting ₹670 crore in revenue for FY25 and plans to double it by FY28.
In H1 FY25, its revenue grew 61% to ₹260 crore, with profit after tax surging by 212%.
#2 Texmaco Infrastructure
Texmaco Infrastructure operates across multiple business segments, including power generation, real estate development, and investment income.
The company owns a 3 MW Mini Hydel power project on the Neora River in West Bengal, contributing 19.8% to its revenue by generating 8.2 million units of electricity, showcasing its involvement in water infrastructure.
However, a significant portion of its income stems from rental properties in Gurugram and Delhi and dividends and interest from investments.
Looking forward, the company aims to unlock value through its real estate projects and maintain stable returns from its power generation and rental businesses.
Stocks Involved in Ultra-Pure Water & Zero Liquid Discharge
The ultra-pure water and zero liquid discharge industry in India focuses on advanced water purification and wastewater treatment technologies to meet stringent industrial and environmental standards.
UPW is critical for industries like semiconductors, pharmaceuticals, and power generation, requiring nearly contaminant-free water.
Here are some companies operating in this sector…
#1 Thermax
Thermax provides solutions for energy, environment, and chemical sectors, offering products like boilers, heaters, air pollution control systems, and water and wastewater treatment systems.
In the water infrastructure domain, Thermax is a leader with advanced water and wastewater treatment technologies, including ultrafiltration systems, zero liquid discharge solutions, and ion exchange resins.
Its new water treatment plant in Pune, commissioned in 2024, underscores its commitment to this critical sector. Thermax is well-positioned for growth, driven by demand for green solutions and industrial products.
For H1 FY25, the company reported revenue growth of 24% year-on-year, supported by robust orders and expansion in key segments.
#2 Praj Industries
Praj Industries operates in the water infrastructure space through its engineering business segment, particularly focusing on wastewater treatment systems.
The water infrastructure division is part of its broader engineering business, which accounted for 18% of the company’s FY24 revenue.
Praj HiPurity Systems, a subsidiary, also supports water-related projects, especially in industries like biopharma, sterile formulations, and personal care, offering high-purity water systems and modular process solutions.
With increasing global and domestic emphasis on sustainable industrial practices and stricter environmental regulations, Praj’s water infrastructure business is poised for growth.
#3 Taylormade Renewables
Taylormade Renewables specializes in renewable energy and sustainable water treatment solutions. The company manufactures solar parabolic concentrating systems and components for steam generation, heating, and solar thermal applications, including air conditioning, space heating, and waste evaporation.
It also offers biomass cook stoves, solar dryers, PV cells, and patented water treatment technologies like TRL RAIN and TRL Zeo-Membrane, which address critical industrial effluent and wastewater challenges with chemical-free, energy-efficient systems aimed at achieving Zero Liquid Discharge (ZLD).
A notable project of the company which is underway is a ₹230 crore water infrastructure development in Andhra Pradesh, including water pipelines, a 24 MLD sewage treatment plant, and source construction.
With increasing demand for ZLD technologies and renewable energy, Taylormade is well-positioned for growth, supported by its patented technologies and expanding Build, Own, Operate model.
In conclusion
Water has emerged as one of the most critical infrastructure sectors, with the entire value chain playing a vital role in addressing global water security challenges.
In India, the sector is witnessing unprecedented growth driven by government initiatives like Jal Jeevan Mission, AMRUT, and the National Mission of Clean Ganga, which are creating substantial market opportunities in water infrastructure development.
The financial landscape in this sector is particularly promising, with companies reporting robust order books and healthy project margins ranging from 12-25%.
The stock market has recognized this potential, reflecting strong investor confidence in water infrastructure stocks.
As water scarcity continues to be a pressing global issue and environmental regulations become stricter, companies operating across the water system value chain are well-positioned for sustained growth.
This makes the sector an attractive proposition for long-term investors.
Nevertheless, before making any judgments, investors should consider the fundamentals of these companies, their ability to execute projects, and corporate governance practices.
Happy Investing!
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com
