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Monday, January 14, 2013

Buy VA Tech Wabag at current levels of Rs. 568 for a target of Rs. 725



VA Tech Wabag - BUY
CMP Rs568, Target Rs725

Fundamentally strong company into Engineering space VA Tech Wabag is really making waves in Chinese market and expected to grow at a phenomenal rate.
Investment into water management technology is the need in current times. Internationally, water is scarce and rising demand of water fueled by growing population is making it even scarcer.This is because water is unequally distributed all over the world; India contains 17% of world population and has only 4% of the total water resources. VA Tech Wabag (VA Tech) is the biggest player in water management space in India has tried to evolve as a biggest player in India and investment in this space will definitely reap profits.


Healthy order book

It has order book of Rs42bn (2.9x FY12 revenues) which provides strong revenue growth. Also it has well diversified order book.
 

 The company has large cash balance of Rs2.9bn which translates into 20% of its market capitalization and has a very strong balance sheet. VA Tech is planning to leverage the cash for an acquisition, which will definitely take the stock price into skies. We would give it a P/E of 14x to FY15E EPS to arrive at a 7-9 month target price of Rs725. BUY BUY BUY. Invest without any risk and relax and wait for profits to reap in near future.


Note : VA Tech Wabag is a Shariah Compliant stock also and hence those investors who are following shariah guidelines can also invest in this stock. Its Ethical to invest in this particular stock.