'Subscribe' to VA Tech Wabag IPO: HEM Securities

MUMBAI: HEM Securities is of the view that VA Tech Wabag’s strong business model & and attractive industry prospects presents a lucrative investment opportunity to bet upon.

“The company is bringing the issue at price band of Rs 1230-1310 per share which will turn up into P/E multiple of 28-30 at post issue EPS on FY10 basis of Rs 42.63.

The company being a multinational player in the water treatment industry provides complete water solution provider leverage its business on the Wabag brand, which was established in 1924.

Also, company outsource the civil works, construction and erection works for its projects to third party contractors which benefits it returns on investments in each project as its fixed assets costs is low.

The company with its strong business model & and attractive industry prospects presents a lucrative investment opportunity to bet upon. Hence we recommend investors to “Subscribe” the issue.

The company has fixed the IPO price-band at Rs 1230-1310 per share of face value Rs 5 each. The proceeds will be used for funding working capital requirements of the company, construction of corporate office at Chennai and implementation of global IT systems.

The issue closes Monday.