VA Tech Wabag is a multinational water and wastewater treatment company.
The broker gave a target price of Rs 391 over the counter, signaling a potential upside of around 29% from its previous close of Rs 304.20 on Friday.
In its report, the brokerage explained the rationale for the call in six points, including strong fundamentals, strong order book, experience management, strong order success rate, strong research and development and government guidance.
“Its vast experience in designing, executing and operating projects, its superior proprietary technology to deliver customized solutions and its professional management team with proven skills have enabled it to dominate a healthy market share in the segments water, sewage and waste management,” Yes Securities said in its report.
Secondly, it has achieved a good deal success rate of 30-35% globally and domestically thanks to the strength of its entire range of competitive and personalized value chain services, according to the report. The company, which has executed more than 6,000 projects, was ranked fourth GWI in 2021 for ensuring safe drinking water and a clean environment.
Yes Securities estimates that the company has a proven track record of large and complex orders and its order book stood at Rs 10,000 crore, implying an order book to invoice ratio of 3.3x rolling revenue, which provides revenue visibility for the next couple. of years.
In India, only 30% of the water discharged into rivers is treated, and currently around 18% of river sections in India are heavily polluted.
The company is soundly managed with a rich and varied experience of more than three decades in the water industry, the report adds.
Capable of managing and executing complex and large-scale projects, the company has a clear focus on innovation and R&D, resulting in the registration of more than 10 technologies and more than 90 intellectual property rights. allowing it to bid on projects at competitive rates while ensuring quality, efficiency and prompt delivery, the brokerage said.
“Given the growing attention of government and multilateral funding agencies to a growing water scarcity crisis, the water treatment industry is well positioned for long-term secular growth,” said Yes. Securities. India is the largest groundwater extractor in the world, consuming 124% more groundwater than China or the United States.
As of December 31, 2021, Rekha Rakesh Jhunjhunwala, wife of big bull Rakesh Jhunjhunwala, owned 50 lakh shares or 8.04% stake in the company. His stake in the company is around Rs 153 crore.
However, the company has yet to announce its final shareholding scheme for the March 2022 quarter.
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