Kotak Securities' report on Va Tech Wabag
"VA Tech Wabag missed expectations on roundabout all fronts led by lower execution, forex impact and higher employee costs. Company has been facing execution issues at its Oman desalination plant which has led to provision for LDs. Order intake in first nine months has been weaker and it could be challenging for the company to meet its annual target unless it is able to win few big ticket orders."
"We continue to view Wabag favourably given entrenched position in the water business, increased government focus on preserving water quality and rising demand for water from urbanization. However, in recent quarters, we have witnessed some discomforting signs including 1) increase in interest costs 2) slowdown in order intake."
"From a valuation perspective, stock appears close to fully valued in our view and likely ignores execution risks associated with EPC projects especially in new geographies. Sell the stock with a target price of Rs 1405", says Kotak Securities research report.
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