VA Tech Wabag IPO long-term investment opportunity: Sharekhan

MUMBAI: Sharekhan is of the view that VA Tech Wabag is the only focused water and waste water treatment company in India with a strong brand, technological backing and healthy execution track record. The brokerage looks at the issue as a long-term investment opportunity.

Wabag is primarily a turnkey contractor for water and waste water treatment plants. It executes projects either on turnkey or item rate basis backed by technology and sub-contracting of civil works.

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.

“With significant industry expertise, knowledge support of the parent, a strong execution track record and a growing order book, the company is well poised to tap the growing water and waste water treatment market. The company has a strong technological backing to compete in the ever growing market.

At the lower and upper ends of the price band of the issue, the stock is offered at 26.3x and 27.8x FY2010 earnings respectively. We believe that the initial public offering of the company, which is the only focused water and waste water treatment company in India with a strong brand, technological backing and healthy execution track record, presents a good long-term investment opportunity,” the report said.

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.