Please refer to important disclosures at the end of this report
1
VA Tech Wabag Limited (VTW) is engaged in water treatment field. The
Company's principal activities include design, supply, installation, construction
and operational management of drinking water, waste water treatment,
industrial water treatment and desalination plants. The strong revenue growth is
likely to be supported by a rise in the order book, while margin expansion is
likely to reflect higher share of domestic orders and completion of low margin
orders from AP Genco and Turkey sewerage treatment plant. The potential orde
r
flows with a higher ticket size could lead further improvement in the overall orde
r
book. VTW is placed at favorable position given the company has strong orde
r
book unlikely with other players struggling to garner fresh orders. Apart from
improvement in topline, uptick in awardance of various government programs
such as Clean Ganga, Smart Cities could also provide enough opportunities to
boost its order book further and thereby the revenues. VTW has a healthy order-
book position of ~`7,931crore as on September 2016 backed by strong orde
r
intake. The tendering of orders in India has also improved and the management
expects that orders with a higher ticket size will flow in the coming quarters.
Management is confident to achieve revenue target of `3,000-3,200cr during
FY17, while the guidance for order inflows remain intake at `4,000-4,200cr. The
strong financial position characterized by healthy ROCE, highly conservative
capital structure and a healthy cash surplus can be deployed for working capital
purposes. The Company has been maintaining a healthy dividend payout o
f
20.58%. Hence Buy.
BUY
CMP `670
Stock Info
Sector
Beta
Bloomberg Code
Shareholding Pattern (%)
Promoters 28.8
MF / Banks / Indian Fls 31.7
FII / NRIs / OCBs 27.1
Indian Public / Others 12.5
Abs. (%) 3m 1yr 3yr
Sensex 13.0 16.1 33.4
Va Tech Wabag 47.8 24.3 89.5
.
52 Week High / Low 693/450
Avg. Daily Volume 13,184
Capital Goods
Market Cap (
`
cr) 3,656
2
BSE Sensex 29,421
Nifty 9,108
Face Value (
`
)
Reuters Code VATE.BO
0.6
Vaibhav Agrawal
022 – 3935 7800 Ext: 6808
V
a Tech Wabag
Others | Capital Goods
March 27, 2017
Va Tech Wabag | Capital Goods
March 27, 2017
2
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Va Tech Wabag
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment
p
eriod
)
: Reduce
-5% to -15%
)
Sell
(
< -15
)