Rakesh Jhunjhunwala’s Bet on this Stock has Paid off Big-time

Rakesh Jhunjhunwala’s Bet on this Stock has Paid off Big-time
Rakesh Jhunjhunwala’s Bet on this Stock has Paid off Big-time

By Aditya Raghunath

Investing.com — Va Tech Wabag Ltd (NS:) is not a name that does the rounds of stock market chat forums. But it should. The stock has gone up over 40% since September 2020. It was in the first quarter that Rakesh Jhunjhunwala’s acquired an 8.04% stake in the company.

The stock closed at Rs 195 on September 30. It closed at Rs 274 on March 2. That’s a move of 40.5% in a little over five months. Brokerage firm Nomura Holdings Inc ADR (NYSE:)is very bullish on the stock and has recommended a ‘buy’ on the stock with a revised price target of Rs 446, up from its earlier Rs 432. That’s a potential upside of over 62% from its current price levels.

“Past concerns on debt build-up, low cashflows and slow-moving orders are largely addressed. Financial closure of HAM (hybrid annuity model) asset and a strong, well-funded order book provide long-term sales visibility,” Nomura said in a note.

Company debt has dropped from a peak if Rs 430 crore in FY19 to Rs 140 crore in FY21 so far. The company also has Rs 480 crore of receivables that are pending since FY18.

The company is an engineering firm that operates in the water treatment space for municipalities and industries. VA Tech Wabag has an order book of Rs 9,600 crore that is largely government-funded.

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