November 18, 2016 / 11:57 IST
VaTech Wabag (VATW) reported strong Q2FY17 results led by execution pick‐up and were a beat to our estimates with 31% revenue growth YoY and better margins despite the low margin AP Genco order execution of Rs1 bn for the quarter. AP Genco order has not only strained the working capital off‐late but the continuous increase in the scope of work has dented the EBITDA margins as well.
VATW trades at 16.4x FY18E earnings and 8.3x EV/EBITDA FY18E, which seems reasonable entry point considering a 33% earnings growth over FY16‐FY18E period. Continuous flow of new orders from both domestic and international businesses, excellent project execution track record, marquee client reference list, asset‐light business model and limited options available in water space makes VATW a long term portfolio stock. Key triggers continue to be improvement in working capital cycle and faster execution of high margin domestic orders.
For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
Read More
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
