Feb 15, 2017 04:40 PM IST | Source: Moneycontrol.com

Buy VA Tech Wabag; target of Rs 746: Edelweiss

Edelweiss is bullish on VA Tech Wabag has recommended buy rating on the stock with a target price of Rs 746 in its research report dated February 13, 2017.

Buy VA Tech Wabag; target of Rs 746: Edelweiss

Edelweiss' research report on VA Tech Wabag

VATW delivered strong EBIDTA growth of 79% YoY (29% higher than expectations), led by better profitability in certain large jobs like Petronas, APGENCO, AMAS, Bahrain with 300bps plus expansion in gross margin YoY. While final provisioning for the Oman JV project was expected, the quantum taken in P/L came as a negative surprise, leading to net loss, adjusted for which core PAT stood higher at INR398mn (+90% YoY).

Outlook

Maintain ‘BUY‘ with TP of INR746 (FY19E 19x P/E), given reasonable earnings CAGR (FY16-19E) of 30%, and 20%+ RoCE by FY19E in light of attractive 12x PE and 6/12M underperformance by 15/25% versus benchmark Sensex returns.

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