VA Tech Wabag IPO opens; should you subscribe?

1957 Investors following Va Tech Wabag. Share this News with them.

0

Like this story, share it with millions of investors on M3

VA Tech Wabag IPO opens; should you subscribe?

A player in water treatment industry VA Tech Wabag has opened its Rs 475 crore initial public offering for subscription.

Post your opinion here

 

0

Tweet

Share on Tumblr

Nifty BSE | NSE 31/05/12 Are Mutual Funds betting on Nifty?

A player in water treatment industry, VA Tech Wabag has opened its Rs 475 crore initial public offering for subscription. The price band is at Rs 1,230-1,310 a share.

The issue consists of a fresh issue of Rs 125 crore and offer for sale of Rs 350 crore. The offer will close on September 24 for qualified institutional investors and on September 27 for retail & non-institutional investors.

Manish Bhatt of Prabhudas Lilladher has recommended investors to subscribe to the issue. Even brokerage houses advised investing in this issue with a long-term perspective. However, the issue is a clear avoid, says Investment Advisor, SP Tulsian.

"On price to book basis, stock of this company looks more expensive when compared to the two larger peers, with revenues of both by about 5 times, of the company. Nagarjuna Construction having BV of Rs.90 is ruling at a PBV of 1.8 times, while IVRCL having book value of Rs.101 is ruling at a PBV of 1.6 times, after adjusting of its 80.5% stake held in IVRCL Assets. Even at the lower end of the price band, the issue seems expensive. Considering the recent transfer of shares, mere exit route for PE investors, lack of significant business upside in near future, cash in hand of the company, as well as peer comparison, the issue is a clear avoid," Tulsian said.

Nirmal Bang recommended subscribing to the IPO due to, (1) Va tech is the only company which is fully focused on water and waste water treatment company in India (2) strong brand, (3) technological backing and (4) healthy execution track record (5) attractive Industry Outlook."