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This Rekha Jhunjhunwala-owned stock zoomed over 100% since November

The stock hit a new high after a gap of over nine years, on Monday. It surpassed its previous high of Rs 972.50 on March 17, 2015

VA Tech Wabag

VA Tech Wabag

Deepak Korgaonkar Mumbai

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VA Tech Wabag (WABAG) shares hit a new high of Rs 1,017, as they surged nearly 12 per cent on the BSE in Monday’s intra-day trade on expectation of improving business outlook. The company, having a strong market leadership, is a direct play on the emerging water crisis, according to analysts.

Since November last year, the market price of the company has more than doubled or zoomed 110 per cent from level of Rs 482.25.

The stock hit a new high after a gap of over nine years, on Monday. It surpassed its previous high of Rs 972.50 on March 17, 2015. 

At 03:20 pm; WABAG was trading 11.06 per cent higher at Rs 1,010.40, as compared to 0.78 per cent rise in the S&P BSE Sensex.

Rekha Jhunjhunwala, wife of ace investor Rakesh Jhujhunwala, owns 5 million equity shares or 8.04 per cent stake in WABAG. Currently, her stake is valued around Rs 500 crore.

Meanwhile, retail individual shareholders hold nearly half or 49.64 per cent stake in Wabag at the end of March 2024 quarter, the shareholding pattern data shows.

Being a pure-play water technology multinational, WABAG offers a complete range of technologies and services for Total Water Solutions in both Municipal and Industrial sectors.

Wastewater technology is primarily used by municipal authorities to treat wastewater in various Indian cities. Rising urban population in major Indian cities has created a demand for wastewater treatment facilities to balance the population with the availability of freshwater. In the coming years, desalination is expected to be a prominent technology in Indian cities for water filtration due to the rising scarcity of fresh water.

WABAG had secured an industrial order worth $33.5 million from SEPCO III Electric Power Construction Corporation Limited towards engineering and procurement of a 20 million litre-per-day industrial wastewater treatment plant at Ras Tanura refinery complex in Kingdom of Saudi Arabia. This order is being executed for Miahona and Saudi Aramco, which is scheduled to be completed over a 20 month period, the company said.

WABAG has a strong order book of over Rs 11,900 crore (approximately 4 times its TTM consolidated revenue), funded by the Centre, multilateral agencies, or sovereign entities, which provide comfort on cash collections and execution.
“The company has maintained a high-quality order book of around Rs 12,000 crore with a healthy mix of 57 per cent EPC (engineering, procurement, and construction) and 43 per cent O&M (operation and maintenance), majority of which have secured payment terms. Further, the company’s strong order book and pipeline visibility instils confidence in ability to continue to grow and generate value for stakeholders in the years to come”, the management had said in Q3FY24 results conference call.

WABAG has been exhibiting a good operating performance, driven by a better order mix and improved execution efficiencies. The company’s order book is robust and, with a promising order pipeline, the company should deliver healthy revenue growth, the brokerage firm Sharekhan had said in the Q3 result update.

Further, the company is focused on margin improvement and cash flow generation and is on the cusp of a healthy growth trajectory in the medium to long term. WABAG is optimistic about growth opportunities present in desalination, ZLD, ultrapure water, and water treatment solutions in both domestic and export markets. 

A well-funded and strong order book with healthy revenue visibility provides comfort in execution and collections going ahead, it added. The stock, however, was trading above the brokerage firm Sharekhan’s target price of Rs 850 per share.

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First Published: Apr 22 2024 | 3:27 PM IST

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