Geojit's research report on VA Tech Wabag
VA Tech Wabag Ltd is a Chennai based Multinational, providing solutions on water recycling and reuse for municipal and corporate clients. Current order backlog stands at Rs.10,712Cr with order intake of Rs.971Cr during the quarter. Company registered better than expected revenue of Rs.796Cr registering a growth of 17.2%YoY and 30.8% QoQ. We expect revenue to grow at a CAGR of 11.7% over FY20-23. Increased government focus on water recycling and higher budgetary spend will boost the order intake going forward. Debt level has shown significant reduction and stands at Rs.383Cr against Rs.482Cr in FY20 and Rs.392Cr in Q2FY21.
Outlook
We expect further decline in debt level due to improved revenue generation. Considering the positive outlook of the water treatment industry and expected revenue rebound along with improving cash position, we value the stock at 1 year forward PE of 10.5x its FY23E earnings with a target price of Rs.288, and upgrade our rating to BUY.
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