Va Tech Wabag Ltd., incorporated in the year 1995, is a Small Cap company (having a market cap of Rs 1521.80 Crore) operating in Engineering sector.
Financials
For the quarter ended 31-12-2020, the company reported a Consolidated Total Income of Rs 799.63 Crore, up 31.07 % from last quarter Total Income of Rs 610.09 Crore and up 17.20 % from last year same quarter Total Income of Rs 682.27 Crore. Company reported net profit after tax of Rs 35.87 Crore in latest quarter.
Investment Rationale
Improvement seen in revenue generation and debt level are expected to continue as execution is picking up with major projects have reached revenue generation stage. Even though receivable levels remained elevated due to GENCO receivables, performance parameters of core business (excluding exceptions like GENCO) looks promising. Considering the positive outlook of the water treatment industry and expected revenue rebound along with improving cash position, we value the stock at 1 year forward PE of 10.5x, its FY23E earnings with a target price of Rs.288, and upgrade rating to BUY.
Promoter/FII Holdings
Promoters held 21.7 per cent stake in the company as of Dec 30, 2020, while FIIs held 14.5 per cent, DIIs 3.7 and public and others 60.1 per cent.
