Vysarn (ASX:VYS): Can the Dewatering Contractor’s Run Continue?

Vysarn Limited (ASX:VYS) has steadily emerged as one of the ASX’s most consistent mid-cap performers in 2025. Specialising in dewatering and water services for miners and government clients, the company has delivered strong half-year results, expanded its contract base, and earned a spot in the S&P/ASX 300 Index.

The stock has nearly doubled in 12 months, but with rising expectations comes a bigger question: can the growth continue, or is a slowdown on the cards? In this article, we break down Vysarn’s business model, its FY25 investor update, and the opportunities and risks that could shape its future trajectory.

 

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What Vysarn Does and Who It Serves

Vysarn isn’t just another name in the contractor space; it’s a critical water management partner. While many service providers chase one-off mining jobs or compete on razor-thin margins, Vysarn has positioned itself as a crucial infrastructure partner in Australia’s most water-stressed sectors. Its core business revolves around hydrogeological drilling, dewatering, and groundwater management—essential services that enable mining operations to extract resources safely and within environmental limits.

Through its flagship subsidiary, Pentium Hydro, Vysarn provides services such as test pumping, reinjection, and managed aquifer recharge. These are not just technical terms; they are vital activities that help miners manage groundwater inflows, prevent flooding in open pits, and comply with increasingly stringent environmental regulations.

But Vysarn’s reach now goes beyond mining. With acquisitions like CMP Consulting Group and Waste Water Services, the company has diversified into urban water infrastructure, environmental consulting, and government utilities. CMP, for instance, holds long-term contracts with Sydney Water, giving Vysarn exposure to stable, annuity-like revenue streams from public-sector clients.

In short, Vysarn serves two of the most capital-intensive and compliance-heavy sectors in Australia: mining and infrastructure. Its clients include major iron ore and lithium producers, government agencies, and civil construction firms—organisations that depend on reliable water management to keep operations running and regulators satisfied.

 

Share Price and FY25 Snapshot

Vysarn’s share price has undergone a strong rerating in 2025. As of 21 July, the stock was trading at approximately A$0.53, reflecting growing investor confidence in its earnings potential and contract momentum. This marks a substantial rise from under A$0.30 a year earlier, more than a 75% gain over 12 months, placing it among the stronger performers in the small-to-mid-cap services space.

Hard numbers have underpinned that performance. In its 1H FY25 results, released in March, Vysarn reported:

• Revenue of A$41.02 million, up from A$27.0 million in 1H FY24
• EBITDA of A$8.14 million, reflecting improved utilisation and project delivery
• Net profit before tax of A$5.24 million, nearly doubling year-on-year
• Cash and cash equivalents of A$17.59 million, with no debt on the balance sheet

These results point to strong operating leverage and robust demand across its key segments, particularly within hydrogeological drilling and wastewater infrastructure. Importantly, the company flagged that earnings would skew toward the second half of FY25, with contract expansions and contributions from recent acquisitions like CMP Consulting expected to gain traction.

Adding to the positive momentum, Vysarn was included in the S&P/ASX 300 Index in March 2025, a move that opens the door to greater institutional ownership and passive fund flows. For a company with a growing footprint in water infrastructure and a clean balance sheet, the index inclusion acts as both validation and visibility.

Looking ahead, the second half of FY25 will be key. Investors will be watching for confirmation of full-year EBITDA guidance, progress on new contract wins, and any margin upside from the integration of CMP and Waste Water Services. If those elements deliver, the current valuation may still have room to stretch.

 

Growth Drivers Supporting the Momentum

Vysarn’s recent momentum hasn’t come out of nowhere; it’s being driven by a powerful combination of sector tailwinds, operational execution, and strategic expansion. Let’s take a closer look at what’s fuelling the company’s growth engine in 2025.

 

Strong Mining Capex and Resource Sector Activity

Mining remains the backbone of Vysarn’s operations, and continued capital expenditure across the Australian resources sector—particularly in iron ore, lithium, and critical minerals—has created a healthy pipeline of work. In regions like the Pilbara, managing groundwater is non-negotiable, and dewatering services are essential for both compliance and productivity. Vysarn’s long-standing relationships with major miners mean it’s well-positioned to benefit from this ongoing investment. As mining companies expand or extend mine life, Vysarn becomes a recurring and essential service provider.

 

Environmental Compliance and Water Scarcity

Australia’s water management challenges are growing, and so is the regulatory scrutiny around how groundwater is extracted, treated, and discharged. Government bodies and mining regulators alike are tightening compliance frameworks, which play directly into Vysarn’s strengths. Its services, such as aquifer recharge, test pumping, and reinjection, aren’t just technical add-ons; they’re increasingly mandated under environmental approvals. This creates a durable, compliance-driven demand base that’s less cyclical than traditional contracting.

 

Diversification Beyond Mining

One of the more strategic moves Vysarn has made recently is diversifying into infrastructure and utilities through acquisitions like CMP Consulting Group and Waste Water Services. CMP’s long-term contracts with Sydney Water and other government clients give Vysarn a reliable stream of non-mining revenue. These contracts are typically lower risk, longer duration, and provide better earnings visibility—something investors value highly in a contractor-heavy business.

This diversification has broadened the company’s exposure beyond mining cycles and brought in higher-margin consulting services that complement its core operations. With water infrastructure investment expected to grow over the coming decade—particularly as cities upgrade stormwater, sewerage, and groundwater systems—Vysarn is well-placed to capitalise.

 

High Equipment Utilisation and Operational Leverage

Operationally, Vysarn has been tightening the screws. Increased utilisation of its drilling fleet and improved labour efficiency have driven stronger margins and EBITDA growth. Unlike some service providers that are still grappling with post-COVID inefficiencies, Vysarn appears to be running a tight ship. As it scales up and spreads fixed costs over more contracts, the benefits of operational leverage are starting to show in its bottom line.

 

Risks That Could Derail the Growth Story

Vysarn is executing well, but like any company in the services space, it faces several risks that investors should keep front of mind. These aren’t red flags, but they are real factors that could impact the company’s earnings trajectory if not managed carefully.

 

Heavy Exposure to Mining Cycles

Despite making progress in diversifying into infrastructure and utilities, mining still accounts for a significant share of Vysarn’s revenue. If major miners delay projects, reduce capital spend, or face commodity price pressure, demand for dewatering and drilling services could soften. A shift in resource-sector sentiment—even a modest one—could have a meaningful impact on contract volume and fleet utilisation.

 

Client Concentration

Vysarn’s strength lies in securing large, high-value contracts, but that also introduces dependency risk. A small group of major clients drives a large portion of the company’s income. The non-renewal or loss of a single key contract could dent both revenue and margins. Expanding the client base and building a more balanced portfolio will be critical for long-term resilience.

 

Competitive Tendering Environment

Government infrastructure work and public utility contracts are attractive but also hotly contested. Even with a strong track record, success in competitive tendering isn’t guaranteed. Overly aggressive bidding to win work could erode margins, particularly if project costs increase or timelines stretch.

 

Cost Pressures and Skilled Labour Shortages

Rising input costs, particularly wages and equipment hire, continue to challenge the sector. In Western Australia, skilled labour remains in short supply, and inflation is still feeding through on multiple fronts. If cost increases outpace revenue growth or if escalation clauses are limited in contracts, margin pressure could emerge.

 

Integration and Execution Risk

Vysarn’s acquisitions, such as CMP Consulting and Waste Water Services, offer growth and diversification, but they also increase complexity. Aligning systems, retaining talent, and delivering promised synergies will require close attention. Any missteps in integration could dilute returns or distract from core operations.

 

Valuation and Peer Comparison

As of July 2025, Vysarn is trading at a P/E ratio of approximately 24–28x (depending on forward earnings assumptions) and an enterprise value to EBITDA (EV/EBITDA) ratio of around 12–13x. While this puts the company at the higher end of valuation among small-cap contractors, it reflects a strong growth trajectory, minimal debt, and favourable market positioning.

By comparison:

• Mid-tier mining services firms like Macmahon Holdings (ASX: MAH) trade at around 5–6x EV/EBITDA.
• Larger diversified contractors like Monadelphous (ASX: MND) sit in the 8–10x EV/EBITDA range.

Vysarn’s premium is partly justified by its niche specialisation in water, a space with significant regulatory tailwinds and relatively less competition. Its net cash balance sheet also adds confidence that it can pursue further growth without diluting shareholders or over-leveraging.

Still, investors should keep a close eye on whether earnings continue to scale, as any hiccups in delivery or contract pipeline could lead to a derating.

 

Final Thoughts: Can Vysarn’s Run Continue?

Vysarn’s recent performance suggests that it’s not merely riding a sector tailwind but executing a well-thought-out strategy. The shift toward integrated water services, a broadening client base, and consistent operational performance are key reasons for its momentum.

If the company continues to deliver strong second-half FY25 results, secures more government and mining contracts, and manages its cost base effectively, there’s every reason to believe the run could continue. However, investors should remain vigilant about its exposure to mining cycles, reliance on large contracts, and execution of recent acquisitions. Valuation is no longer in deep value territory, so expectations are higher, and results will need to match.

For now, Vysarn offers a compelling mix of growth, sector alignment, and strategic execution, making it a stock worth watching closely in the back half of 2025.

 

FAQs

• What is Vysarn’s primary business?

  Vysarn provides dewatering, hydrogeological drilling, and water management services, primarily for mining and government infrastructure clients.

• Is Vysarn still exposed to the mining sector?

  Yes, mining remains a key revenue driver, though the company is diversifying through government water projects and consulting services.

• How has Vysarn expanded its operations?

  Through acquisitions like CMP Consulting and Waste Water Services, Vysarn has expanded into higher-margin government and infrastructure markets.

• What risks should investors consider?

  Key risks include mining capex downturns, client concentration, tender competition, and cost inflation impacting margins.

• Is Vysarn a good long-term investment?

  If current growth continues and risks are well-managed, Vysarn could offer long-term upside, particularly in water-focused infrastructure services.