VA Tech Wabag Ltd: Research Report By NVS Brokerage

VA Tech Wabag Ltd. (VTW) is one of the Global Leaders in Water and Waste Water Treatment Solutions. VTW’s International presence spans 20 countries across South East Asia, Middle East, Europe and Latin America

VTW currently holds its highest ever Order Book of Rs. 11,050 Crs. which includes mega projects under the National Mission for Clean Ganga Scheme (NMCG) to develop Sewage Treatment Plants (STP) of 150 MLD Capacity along with sewerage network of over 450 Kms, Atal Mission for Rejuvenation and Urban Transformation (AMRUT) Scheme to set up a 178 MLD drinking water treatment plant in Coimbatore, Tamil Nadu. VTW secured a USD 48 Million Contract for a sewage treatment plant at New Jeddah Airport, Kingdom of Saudi Arabia. The Company’s Order Book of Rs. 11,050 Crs. comprising almost 4.5x of the Topline.

VTW in August 2020 raised funds to the tune of Rs. 120 Crs. from marquee investors such as Rekha Rakesh Jhunjhunwala and Anand Jaikumar Jain amongst others at a price of Rs.160/- per Equity Share (including a Premium of Rs. 158/- per Equity Share). We believe this marquee fund raising sets a benchmark pricing for shares of the company.

The Government spending through various schemes and policies to meet the ever growing demand for water presents a huge opportunity for VA Tech Wabag for future business

We expect VTW to be back in the growth trajectory in the ensuing quarters. An all time high order book, substantial reduction in debt levels resulting in improved working capital cycle and massive investments expected in the water treatment space by the Government of India in the next 5 years make VTW a buy at CMP Rs. 196 at 24x FY21 earnings.