This Jhunjhunwala stock rallies 15% as Nomura raises target price

New Delhi: Shares of water treatment player Va Tech Wabag advanced as much as 15 per cent in Wednesday's trade after global brokerage firm Nomura raised its target price on the stock.

The Japanese research firm maintained a 'buy' rating on the stock while increasing the target to Rs 634 per share, which shows an upside of about 115 per cent from Tuesday's closing price of Rs 295.55.

Following the revision in the target price, shares of Va Tech Wabag rallied as much as 15 per cent to Rs 340 per cent before slipping to 326.85 at 11.45 am.

BSE barometer and benchmark Sensex was trading 175.7 points or 0.30 per cent lower at 57,966.35 at the time of writing this report.

Rekha Jhunjhunwala, the wife of Rakesh Jhunjhunwala, owned 50,00,000 equity shares or 8.04 per cent stake in the company at the end of December quarter.

"We continue to value Va Tech Wabag at 15x (based on sustainable ROE of 14 per cent) FY24F EPS of Rs 41.8 and add book value of HAM (hybrid annuity model) assets to arrive at our target price of Rs 634," said Nomura in its report.

The brokerage has highlighted slowing domestic capex for water and a sharp rise in commodity costs as key risks for the company.

Shares of Va Tech Wabag have remained flat over the last one month, whereas the counter is trading about 25 per cent below its 52-week high of Rs 404.25 hit in August last year.