Hold Va Tech Wabag, target price Rs 307: ICICI Securities

ICICI Securities has hold call on Va Tech Wabag with a target price of Rs 307. The current market price of Va Tech Wabag Ltd. is Rs 299.9. Time period given by analyst is one year when Va Tech Wabag Ltd. price can reach defined target.

Va Tech Wabag Ltd., incorporated in the year 1995, is a Small Cap company (having a market cap of Rs 1893.70 Crore) operating in Engineering sector.

Financials
For the quarter ended 31-03-2021, the company reported a Consolidated Total Income of Rs 1000.81 Crore, up 25.16 % from last quarter Total Income of Rs 799.63 Crore and up 23.44 % from last year same quarter Total Income of Rs 810.75 Crore. Company reported net profit after tax of Rs 42.29 Crore in latest quarter.

Investment Rationale
Financial closure of Namami Ganga project and pick-up in domestic execution provide growth visibility. The stress on working capital continues and provision towards doubtful debtors is likely to limit margin upside. Order prospects are promising, which is likely to support FY23E earnings; hence the brokerage maintains HOLD with a revised target price of Rs307 (previously: Rs225). It has rolled forward target valuation to FY23E from Sept’22 earnings and increased target multiple to 12x from 10x factoring in improved growth visibility and healthy cash flows.

Promoter/FII Holdings
Promoters held 21.7 per cent stake in the company as of March 31, 2021, while FIIs held 14.6 per cent, DIIs 3.3 per cent and public and others 60.4 per cent.

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