Company Update: Va Tech Wabag Ltd - BUY - TP Rs.672 - Kotak

- We note that the order placements for the Namami Gange has started to gain momentum - VA Tech Wabag (VAW) has recently announced some order wins. With the APGENCO plant achieving COD, we believe receivables from this project should get cleared out in FY19, a key positive which will alleviate investor concerns.

- The Wabag stock has corrected in recent months on 1) weak order intake in FY18 and credible risk of missing on the order intake guidance 2) Decline in order book 3) Higher working capital engagement especially in case of APGENCO orders.

- However, valuations are reasonable at 13.4x FY20E earnings and at a discount to sector peers. We recommend BUY with target price of Rs 672 (Unchanged).

- Concerns: Business model is prone to execution risks like labour movement, currency, law and order etc.

Shares of VA TECH WABAG LTD. was last trading in BSE at Rs.509.95 as compared to the previous close of Rs. 526.6. The total number of shares traded during the day was 16156 in over 723 trades.

The stock hit an intraday high of Rs. 527.85 and intraday low of 508. The net turnover during the day was Rs. 8302810.

Source : Equity Bulls

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