Buy Va Tech Wabag; target of Rs 420: Sharekhan

Sharekhan's research report on Va Tech Wabag

Order intake is expected to be robust in H2FY2023. The company is a key contender for ~Rs 4,500 crore Chennai desalination EPC and O&M order. Order book stands at Rs. 9,200 crore executable over a period of 2.5-3 years. The long-term prospects are promising as the global desalination market is growing at a CAGR of 9.32% and is likely to reach USD 28.1 billion (CY2020-26). Further, wastewater treatment plant’s market in India is likely to grow at a CAGR of 6.9% (CY2021-26) to reach USD 21 billion. VA Tech has strong long-term prospects as domestic and overseas order pipeline remains buoyant. The company’s focus on technological and well-funded industrial projects would drive growth and lead to better margins and timely cash flows.

Outlook

We reiterate Buy on VA Tech Wabag (VA Tech) with a revised PT of Rs. 420 post our interaction with the management considering multiple growth opportunities globally and attractive valuation.