VA Tech Wabag Research Report By ICICI-Direct

Strong opportunity in the offing…

VA Tech Wabag (Wabag) is a leading MNC in the water treatment space with a global presence and access to over 100 patents. The company operates on an asset light EPC model, thereby manifesting a lean balance sheet. With growing concern on access to clean water and urgent measures to solve the issue of depleting water resources, the investment in water treatment is likely to increase manifold globally. Accordingly, Wabag is expected to benefit significantly by leveraging its strong domestic presence and rising global footprint. The company’s strong book-to-bill ratio of ~2.3x provides revenue visibility for two years. This coupled with a strong execution track record is expected to lead to 15.5% revenue CAGR in FY14-17E to | 3,452 crore while margin is expected to expand 90 bps to 10.2% over FY14-17E. Hence, we initiate coverage on Wabag with a BUY recommendation and a target price of Rs 1,725.

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