Result Update: Va Tech Wabag Ltd - BUY - TP Rs.378 - Kotak

VA Tech (VAW) reported weak set of numbers which were lower than our estimates on revenue and profit front. EBITDA margin bore the brunt of lower revenues. On the positive side, order wins were strong in Q2FY19, thereby leading to much improved order book.

Key Highlights

- Order intake saw a massive jump due to couple of lumpy orders.

- Order book at Rs 85.5 bn, up 20% on a y-o-y basis.

Valuation and Outlook

- VAW is trading at 12x and 10x, FY19 and FY20 earnings respectively. In view of the long term growth potential in water and waste water treatment and reasonable valuations, we reiterate "BUY" with price target of Rs 378 (earlier Rs 476), valuing the stock at 13x FY20 earnings (earlier valued at 13xFY20E).

- We will turn more bullish if 1) upturn in order inflows and 2) receipt of retention money from APGENCO.

Shares of VA TECH WABAG LTD. was last trading in BSE at Rs.289 as compared to the previous close of Rs. 289.25. The total number of shares traded during the day was 10497 in over 386 trades.

The stock hit an intraday high of Rs. 294.65 and intraday low of 285. The net turnover during the day was Rs. 3048138.

Source : Equity Bulls

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