VaTech Wabag India Ltd is a leader in the Indian water technology market with a complete portfolio in the areas of municipal and industrial water and wastewater treatment. The company was founded in 1996 in Chennai, and currently holds a market share of over 15% in the country. With a presence across the complete water value chain, Wabag is the best player in the water scarcity area. As an extension, the company has also introduced an engineering centre of global standard under its umbrella of services. The company has top-quality management systems and many municipalities and cities are satisfied clients. There is huge investment required in water supply, sewage treatment and O&M services in the country over the next decade, and speciality companies like VaTech Wabag with a significant presence and proven track record, stand to gain the most. Moreover, there are immense business opportunities in other emerging areas like Vietnam, Turkey, the Philippines and Saudi Arabia, and the global water industry is predicted to become a $500 billion industry in the next few years. Wabag is quite comfortable, with a strong order book and visible new orders across segments and geographies. The Central government's flagship initiatives like Namami Gange, Swachh Bharat and Smart Cities would drive potential order growth, as each of the above entails a Rs 500 billion opportunity. Delhi Jal Board and Ganga Rejuvenation projects are incremental opportunities for the company, which could double its order book position and provide significant business traction. The stock currently quoted at Rs 750 trades at a premium to its average valuation. However, given its niche as a pure water solution provider, cash rich balance sheet, excellent track record, technological advantage, marquee client list and huge opportunities in the domestic and overseas market, the VaTech Wabag stock has an upside of more than 40% from present levels in the next year. The mood was spectacular for the Indian stock markets, with the Sensex rising 409 points and the Nifty growing 111 points to end the week at 28,114 and 8,532 respectively. Sentiment was upbeat amid declining crude oil prices and hope of a rate cut by the RBI. The no rate hike stance by the US Federal Reserve brought cheer to the Indian debt and equity markets. With the India Volatility Index decreasing by nearly 5%, our markets look set for further gains in the coming week.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.