Rakesh Jhunjhunwala portfolio: ICICI Securities bullish on this stock, raises target price
Premium- Given the healthy 9MFY22 performance and strong orderbook, the brokerage has upgrade its rating on the stock
VA Tech Wabag’s (VA Tech) revenues were down 6% YoY at Rs7.5bn due to 7% YoY decline in EPC segment in Q3FY22. However, due to better execution mix of industrial and overseas orders, the company was able to improve the operating margins despite increased input costs, highlighted domestic brokerage house ICICI Securities.
Given the healthy 9MFY22 performance and strong orderbook, the brokerage has upgrade its rating on the stock to Add from Hold and has revised target price to ₹366 (earlier ₹365).
“In the recent Budget, allocation towards Jal Jeewan Mission was increased to Rs600bn while Namami Ganga phase-2 is expected to get tendered out soon. Additionally, as ESG norms tighten and demand for water-related projects increases, we expect industrial order inflow to pick pace. Company has developed a strong niche in the water treatment segment for both industrial and central government-focussed projects," ICICI Securities stated.
The company's gross margin expanded 280 bps YoY leading to an EBITDA margin expansion of 140 bps YoY to 10.2%. EBITDA and PAT grew 8.6% and 9% YoY, respectively. Orderbook stands at a robust ₹100 bn led by strong order intake of ₹9.6 bn during the quarter.
Although the orderbook is lower than its peak of FY20, management is focusing on bidding for more engineering and equipment supply orders. Chennai 400-MLD desalination bids are close to completion and might get awarded in Q2FY23, the note stated.
As per the BSE shareholding pattern, ace investor Rakesh Jhunjhunwala's wife Rekha Jhunjhunwala has 8.04% stake in the water treatment company as of December 2021 quarter.
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The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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