GST Council Meeting Outcome: Big boost for Rakesh Jhunjhunwala's stock as sewage treated water gets exemption from GST

This sewage water treatment stock in billionaire investor Rakesh Jhunjhunwala is all set to gain big from the announcement made by the GST Council on Wednesday. The council has exempted sewage treated water from GST.  

"Sewage treated water is exempt from GST and is not the same as purified water. The word 'purified' is being omitted to make this amply clear," said the GST council in its minutes. Earlier, the same attracted 18% GST.  

The direct beneficiary of this outcome is Va Tech Wabag, one of the 33 stocks in Rakesh Jhunjhunwala's portfolio. As per March 2022 corporate filings, the celebrity investor holds 8% stake, aggregating to 50 lakh shares, in the water treatment company.   

Rakesh Jhunjhunwala and Associates publicly holds 33 stocks in its portfolio as per the quarter ending March 3, 2022. The value of Rakesh Jhunjhunwala and Associates' portfolio has been pegged at over Rs 25,544 crore as on June 29, 2022, according to stock analysis portal trendlyne.com. 

In early June, the company has also bagged an order for 50 MLD desalination project in Senegal. 

"VA TECH WABAG (‘WABAG’), a leading pure-play water technology Indian Multinational Group, further enhanced its global position in the Desalination market, by securing a consortium Design, Build, Operate (‘DBO’) order, for the 50 MLD (expandable to 100 MLD) Mamelles Sea Water Desalination," said the company in regulatory filing on Friday.   

Earlier, considering attractive valuation and improving earnings outlook, brokerage firm Sharekhan had maintained a 'buy' rating on Va Tech Wabag with a revised PT of Rs. 333. The target price by the brokerage came on CMP of Rs 224.  

"Domestic and overseas order pipeline remained buoyant. The company is focusing on technological projects which are backed by multi-lateral funding agencies or central government. This would provide better margins and ensure timely and better cash flows," it had said. 

Shares of Va Tech Wabag ended flat at Rs 234.50 per share on the BSE on Thursday. As on June 29, the counter gave a negative return of over 32% in the past one year.  

Headquartered in Chennai, VA Tech Wabag Ltd is a multinational player in the water treatment industry. The company offers complete life cycle solutions, including conceptualization design engineering procurement supply installation construction and O&M services