Buy Va Tech Wabag; target of Rs 850: Sharekhan

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26 Aug, 2025 12:21

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Sharekhan's research report on Va Tech WabagDuring our interaction, the management shared that despite the fall in crude oil prices, the existing orders in hand are not facing any delay nor there is any observable slowdown in payment yet. Out of the total order book of Rs7,100 crore in hand (excluding framework orders), around Rs1,200-crore (~17% of total orders) orders are from oil producing countries. Further, the management reiterated that there is low payment related risk in those projects as a majority of them are funded by multilateral international agencies. Given the pre-ordering activities, they expect the pipeline to remain healthy too. Though, with unprecedented fall in crude oil prices, there could be some deferment in capex by oil producing countries; however, budgets for water related projects would be the last thing to be truncated.We believe the existing orders from oil producing countries are not facing any challenge but given the depressed crude oil for elongated period and international order inflow (especially from oil producing countries) could witness some deferment. However, on the domestic side, we expect traction in coming years given the thrust of the government. Further, we expect enhanced focus of the government on water space in the upcoming Union Budget FY2017 (as water is one of the key focus areas). We have retained our Buy rating on VTW with an unchanged price target of Rs850, given a quality engineering stock and other positives like niche expertise, professional management, structural growth story of water industry and strong balance sheet (net cash positive) in its favour.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.

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