Result Update: VA Tech Wabag Ltd - BUY - TP Rs.672 - Kotak

VA Tech Wabag (VAW) reported weak set of numbers in the third quarter on an operational basis. Profit and EBITDA numbers were lower than our expectations. Order intake was also weak and the company stands risk of missing out on its annual guidance. The stock has underperformed in recent quarters due to increasing working capital intensity which had raised net borrowings. The company has been struggling to reverse this trend and to its credit, in Q3FY18, the company has made some gains on the working capital front, which has enabled it to reduce net debt by Rs 1.9 bn. Receivables, in our view remains the key monitorable and more so that of APGENCO orders. We have been positive on the stock in view strong order book of the company coupled with relative under-performance in stock price in 9MFY18. Valuations are attractive relative to peers. Reiterate "BUY" but with an revised price target of Rs 672 (Rs 711 earlier).

Shares of VA TECH WABAG LTD. was last trading in BSE at Rs.565.9 as compared to the previous close of Rs. 561.6. The total number of shares traded during the day was 3661 in over 260 trades.

The stock hit an intraday high of Rs. 566.65 and intraday low of 559.6. The net turnover during the day was Rs. 2059227.

Source : Equity Bulls

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