VA Tech Wabag (BUY, 80% upside) - AMBIT

VA Tech will report its 1QFY14 results today. We expect consolidated sales to increase 15% YoY. Further, the contribution of the first quarter's revenues to annual revenues would marginally increase, as VA Tech is trying to normalise its annual earnings; recent order additions in 4QFY13 and 1QFY14 will support this gradual shift. We estimate a marginal 10bps improvement in EBITDA margins, as a decline in employee severance costs would increase the overseas subsidiary's margins. In our opinion, PAT would increase by 31% YoY on a historically low-base first quarter.

Source : Equity Bulls

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