Subscribe to Va Tech Wabag IPO, says Nirmal Bang

MUMBAI: Nirmal Bang has advised investors to 'Subscribe' to Va Tech Wabag IPO. The company is well balanced to tap the growing water and waste water treatment market, the brokerage says.

“With significant industry expertise, advance technology, strong execution track record and a growing order book, Va Tech Wabag is well balanced to tap the growing water and waste water treatment market.

Further, the company is strengthening its base in India and is setting up local presence in the target markets that are low-cost and would help bring down the company’s dependence on Austria and Switzerland for servicing.

The EBIDTA margin on the consolidated basis has improved to 9.83% in FY2010 from 4.8% in FY2008. At the lower and upper ends of the price band of the issue, the stock is offered at 27.15x and 27.8x FY2010 earnings respectively.

We recommended Subscribe to the IPO due to, (1) Va tech is the only company which is fully focused on water and waste water treatment company in India (2) strong brand, (3) technological backing and (4) healthy execution track record (5) attractive industry outlook,” the report said.

The company has come up with a public issue of Rs 4 51.37 crore to Rs 472.59 crore. 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.

As per the NSE website, as on September 23, till 12 pm, the issue was subscribed just 0.05 times.

The issue closes Monday.