Rakesh Jhunjhunwala Stocks: This water treatment company’s shares may surge by 58%, says brokerage; here is why

Rakesh Jhunjhunwala Stocks: Billionaire investor Rakesh Jhunjhunwala-backed this water treatment and management stock – Va Tech Wabag has the potential to grow over 58 per cent, YES Securities said in a report, citing multiple triggers, including March quarter results, strong business outlook and robust order book.  

Given the growing attention of the government and multi‐lateral funding agencies toward an escalating water shortage crisis, the water treatment sector is well poised for secular, long‐term growth, a domestic brokerage firm YES Securities said in its report.  

In the brokerage’s view, the company’s robust order book thriving on strong market leadership, execution ramp up, and operational efficiencies would help it capitalize on the forthcoming opportunities.  

Rakesh Jhunjhunwala’s wife Rekha Jhunjhunwala holds 5,000,000 equity shares, which translates to over 8 per cent stake in Va Tech Wabag, as per the latest BSE shareholding pattern of the company. 

Rakesh Jhunjhunwala, who is termed as the Big Bull of the Indian stock market, publicly holds 34 stocks with a net worth of over Rs 29,695.6 crore, as per the stock analysis website trendlyne.com. 

The company reported a decent set of numbers with revenues marginally below estimates owing to a slowdown in the execution of a few international orders with pressure on margins. 

The management indicated it would focus on improving the intake of international orders as these projects have sustainable margins and have shorter execution timelines, which will help improve its cash flow. 

At its current market price, the stock trades at a P/E of 10.5x/ 8.7x on FY23E/24E earnings estimates, YES Securities said, while maintaining a Buy rating on the stock with a target price of Rs 391 a share. The stock surged over 4 per cent to Rs 257.2 per share on the BSE intraday on Wednesday.  

The counter is surging for the last five sessions, as it jumped over 10 per cent on the BSE against 2.5 per cent rise in the S&P BSE Sensex during the same period.