Scripscan:Va Tech Wabag Ltd
cmp:340
Code:533269
Story:The stock of water and waste treatment solutions provider, VA Tech Wabag (VA Tech), has been beaten down by 30 per cent since July, pushing it far below its IPO issue price. Apart from declining during the recent market correction, the stock also reacted negatively after the company's management mentioned a slowdown in its overseas operations. The reaction appears overdone.70 per cent of VA Tech's order book is tilted towards the domestic market with the rest quite diversified across geographies. The group's multi-geography presence means that it is unlikely to be badly hit by slowdown in any one region. Two, the domestic market for water and waste treatment, both in the industry and municipal segments, continues to be robust.VA Tech's superior technical skills and tie-up with overseas players, wherever required, makes it well-placed to tap domestic opportunities. Three, VA Tech's strong cash position and low debt status, makes it a safer mid-cap bet given the market's aversion to leveraged companies.Investors with a two-three-year perspective can consider taking limited exposure to the stock of VA Tech. At the current market price of Rs 340, the stock trades at 10.5 times its expected consolidated per share earnings for FY-13.Factoring in a slowdown in overseas operations, I expect FY-12 performance to be muted with an expected price earnings multiple of 14 times.
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