This Jhunjhunwala stock zooms 16% from 52-week low, will the bull run continue?

Shares of Va Tech Wabag have zoomed nearly 16 per cent from their 52-week low in the last seven trading sessions. The stock of the sewage and water treatment solutions provider fell to a 52-week low of Rs 223.65 on May 26, 2022. It hit an intraday high of Rs 258.95 today, translating into a gain of 15.78 per cent during the period.  Later, the stock ended 3.58 per cent lower at Rs 250 on BSE.

The stock is part of ace investor Rakesh Jhunjhunwala's portfolio. The big bull held 50 lakh shares or 8.04 per cent stake in the company as of March 31, 2022.

Foreign portfolio investors and mutual funds held 16.17 per cent and 3.41 per cent stake, respectively, at the end of last quarter.

In Q4 of the previous fiscal, 1.08 lakh public shareholders held 78.30 per cent stake or 4.86 crore shares in the firm. Three promoters held 21.70 per cent stake or 1.34 crore shares in the last quarter. 1,03,402 public shareholders held 2.03 crore shares in the firm, amounting to a stake of 32.71 per cent with an individual share capital of up to Rs 2 lakh.

Seven public shareholders held 81.32 lakh shares of the firm, amounting to a stake of 13.08 per cent with an individual share capital of over Rs 2 lakh.

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YES Securities turned bullish on the firm at the end of May and gave a target price of Rs 391 for the stock.

"VA Tech Wabag's reported a decent set of numbers with revenues marginally below estimates owing to a slowdown in the execution of few international orders with pressure on margins." During FY22, the company bagged orders worth around Rs 3,650 crore taking the order book to Rs 10,100 (3.4x FY22 sales) as of Q4FY22," the brokerage said on May 30.

The management said it would focus on improving the intake of international orders as these projects have sustainable margins and have a shorter execution timeline, which will help improve its cash flow.

Commenting on the outlook of VA Tech Wabag stock, YES Securities said, "VA Tech's robust order book thriving on strong market leadership, execution ramp up, operational efficiencies would help it capitalise on the forthcoming opportunities. At the current market price, the stock trades at a price-to-earnings of 10.5 times and 8.7 times on FY23 and FY24 earnings estimates. We maintain our 'Buy' rating on the stock with a target price of Rs 391 based on 12 times P/E on FY24E earnings."

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For the quarter ended March 31, 2022, VA Tech Wabag reported a consolidated net profit (attributable to the parents) of Rs 46.07 crore, falling 0.99 per cent against Rs 46.53 crore profit in the corresponding quarter a year ago.

Revenue from operations fell 10.75 per cent to Rs 891.86 crore against Rs 999.25 crore during the same period.

YES Securities said the bottom line of the company came above our expectations of Rs 38.9 crore mainly due to higher operating efficiency.

Of late, the stock has risen amid a series of order wins. On June 3, the company announced its first order win from Senegal worth about $146 million (about Rs 1,133 crore) to provide a safe and stable water supply to the people of Senegal by ensuring a highly sustainable water source.

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On June 1, the company won a 18-million-euro (about Rs 150 crore) order from Russia. The order was bagged from Korea-based DL E&C Co. towards a water treatment package for the EuroChem methanol production facility in Kingisepp, Russia.

The company is engaged in water treatment field. Its principal activities include design, supply, installation, construction and operational management of drinking water, waste water treatment, industrial water treatment and desalination plants.

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