A multi-thousand-crore Middle Eastern bet just dissolved. The Saudi Water Authority has cancelled the tender for a 300 million litres per day mega seawater desalination plant at Yanbu, stripping water treatment specialist VA Tech Wabag of a ₹2,332 crore contract.
Wabag notified stock exchanges on Saturday, November 14, confirming that the client scrapped the procurement entirely through the kingdom's Etimad electronic tendering platform, citing internal reasons attributable to the customer. The company had initially secured the contract in July 2025. Management had already completed required contractual formalities and submitted the executed paperwork to Riyadh for counter-signatures. Those counter-signatures never came.
Instead, the Gulf agency wiped the board.
Wabag said it is approaching the Saudi authority directly to determine the rationale behind the sudden withdrawal and chart its next operational steps. The scrapped Yanbu development, situated on Saudi Arabia's west coast, covered complete design, engineering, procurement, construction, and commissioning. It carried an estimated value of $272 million, or 1.019 billion Saudi riyals.
Yet this is not an isolated shock. The development marks the second large-scale reversal Wabag has suffered in the kingdom within two years. In December 2024, the Saudi Water Authority similarly scrapped a separate 300 MLD desalination project tender, chalking the cancellation up to internal administrative procedures.
Market Context: Gulf infrastructure tenders operate under strict sovereign discretion. While cancellations through state platforms like Etimad carry zero financial penalties for bidders, repeated administrative project pullbacks introduce sharp order-book volatility for EPC players operating across the GCC corridor.
| Project & Financial Metric | Value / Status | Details |
|---|---|---|
| Yanbu Desalination Contract | ₹2,332 crore ($272 million) | 1.019B SAR; 300 MLD capacity |
| Project Scope | EPC & Commissioning | Seawater plant on Saudi west coast |
| Contract Status | Cancelled by Client | Notified via Etimad platform |
| Q2 FY27 Net Profit (PAT) | ₹104 crore | Operating margin at 14.4% |
| Q2 FY27 Revenue | ~₹1,000 crore |
Despite the Yanbu derailment, Wabag's underlying balance sheet enters the storm with substantial domestic and export execution momentum. The company generated roughly ₹1,000 crore in revenue during the second quarter of FY27, converting that top line into a profit after tax of ₹104 crore at a 14.4% operating margin.
CFO Skandaprasad Seetharaman had previously pegged full-year FY27 revenue growth toward the upper boundary of Wabag's 15% to 20% guidance band, pointing to an order backlog that ballooned past ₹20,000 crore compared to its historical ₹7,000 crore to ₹10,000 crore baseline.
We are very confident with the order book as well as the bid pipeline; the year should also be strong," said CFO Skandaprasad Seetharaman.
Finance brass expects to preserve operational margins between 13% and 15%, keeping capital preservation and cash flow generation at the core of project underwriting. Shares of VA Tech Wabag closed down 1.8% at ₹2,043 on Friday ahead of the weekend filing. Even with the Yanbu blow, the counter has surged more than 55% across calendar 2026, leaving traders to test whether the ₹20,000 crore backlog can absorb another Saudi stumble when markets reopen on Monday.
| Driven by industrial execution |
| Total Order Book | Crosses ₹20,000 crore | Expanded from ₹7,000–10,000 crore band |
| Friday Closing Share Price | ₹2,043 (Down 1.8%) | Stock up >55% across 2026 |