At the CMP of Rs 605, Va Tech Wabag Ltd is trading at 9.49x its FY16E EPS of Rs 63.73. The company’s diversified global presence; high revenue visibility and superior in-house technology provide low downside risk to the stock at CMP. Having 100 patents in water space and technological expertise coupled with strong cash balance make WABAG a strong contender to bid for big ticket Government projects. We attach an exit multiple of 11x FY16E EPS to arrive at the target price of Rs 701. We recommend a BUY rating on WABAG with target price of Rs 701, implying potential upside of 16%.
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