Motilal Oswal's report on Va Tech Wabag
2QFY15 consolidated revenue at INR5.1b (up 8.9% YoY) was below estimate of INR5.6b, largely led by lower revenue in overseas subsidiaries at INR2.7b (up 10% YoY) v/s estimate of INR3.3b. Standalone revenue at INR2.4b (up 5% YoY) was in line. Management maintained FY15 revenue guidance at INR26-27b v/s INR22.3b in FY14.
Adjusted EBITDA at INR329m (v/s est. of INR439m) was down 13% YoY and 25% below estimate. Standalone EBITDA was in line at INR236m (v/s est. of INR250m), while subsidiary EBITDA declined 51% YoY in 2QFY15 at INR93m and was meaningfully below estimate of INR189m.
"NWC stood at 72 days at end-2QFY15 v/s 49 in end-FY14, given higher advances to sub-contractors and suppliers, and the attempt is to curtail at FY14 levels. At CMP, VATW trades at 23x / 18x FY16E/17E EPS of INR69.5 /85.2. Maintain Buy with a target price of INR1,725 (20x FY17E)", says Motilal Oswal research report.
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