Today's Jhunjhunwala Stock Set Record High, Climbed for Fifth Session; Why?

VA Tech Wabag shares reached an all-time high, increasing for the sixth consecutive session on Tuesday. The surge in the Jhunjhunwala stock followed the announcement that the company obtained a substantial order of Rs 1,000 crore for a 100 MLD Sea Water Desalination Plant from Indosol Solar Private Limited for their Solar PV manufacturing facility in Andhra Pradesh.

VA Tech Wabag shares increased by 4.39% to Rs 1743.85 today, compared to the prior closing of Rs 1670.45 on the BSE. The market capitalisation of VA Tech Wabag increased to Rs 10,528 crore. The multi-bagger stock has increased by 284% over one year and 549% over two years. A total of 18,000 shares of the firm were traded, resulting in a turnover of Rs 31.2 million on the BSE. VA Tech Wabag stock possesses a one-year beta of 1.1, signifying considerable volatility throughout the time.

Rekha Jhunjhunwala, spouse of the deceased investor Rakesh Jhunjhunwala, possessed 50 lakh shares, constituting an 8.04% stake in the company at the conclusion of the June 2024 quarter. The stock of VA Tech Wabag possesses a one-year beta of 1.1, signifying considerable volatility during that timeframe. The stock declined to a 52-week low of Rs 440.05 on October 26, 2023.

"This order includes the Engineering Procurement (EP) scope of design, engineering, supply, Installation, Testing and Commissioning of the 100 MLD Desalination Plant, which will be executed over a 38-month period, followed by a 15-year Operation and Maintenance (O&M) contract. This plant will be built with state-of-the-art Desalination technologies, designed for superior energy efficiency and production of water to meet the requirements of the 10 GW integrated Solar PV manufacturing unit of Indosol Solar in Andhra Pradesh," mentioned Va Tech Wabag.

Brokerages predominantly maintain a bullish outlook on the multibagger stock. Axis Securities commenced coverage on the stock with a price objective of Rs 1,700 per share, which was achieved today.

"We initiate coverage on Va Tech Wabag Ltd. (VTW) with a BUY recommendation. Our recommendation is supported by a) Strong industry tailwinds, b) Improving profitability, c) Robust Order book, and d) Expanding offerings. The stock currently trades at 18x FY26E EPS. We value the stock at 23x FY26E EPS and initiate coverage with a BUY rating on the stock with a target price of Rs 1,700/share," said the brokerage.

According to the broking, Axis Securities anticipates significant industry advantages, enhanced profitability, a substantial order book, and an expansion of the firm's capabilities. The company presently trades at 18 times the FY26E EPS, while Axis Securities appraises it at 23 times the FY26E EPS.

ICICI Securities, a domestic broking, is optimistic and has issued a buy recommendation with a revised price objective of Rs 1,541, up from the previous aim of Rs 1,445.

According to the firm, Wabag has streamlined its operations, rectified its balance sheet, and enhanced its profit margins during the past 24 months.

"VA Tech Wabag (Wabag) bagged a mammoth order of Rs 2,700 crore (equivalent to its FY24 revenue) from the Middle East for a desalination plant – the entire order is for EPC. As a result, Wabag’s EPC order book (OB) is now close to INR 79bn or >3x book-to-bill ratio. Order inflow (OI) has been a concern for the last 18 months – FY24/Q1FY25 OI undershot Street’s expectations (lower than revenues). At the beginning of the fiscal, management had indicated a good bidding pipeline from the Middle East. It had also pre-qualified to bid for Egyptian desalination contracts to bid up to 1000mld. Note – Middle East/Egypt have a strong pipeline of desalination contracts, " said the brokerage.

Domestic broking Sharekhan established a price target of Rs 1,700 for the stock.

"Va Tech’s focus on technologically advanced EP projects, industrial and international projects, and increasing share of O&M contracts would improve margins, cash flows, and working capital cycle. We maintain BUY with a revised price target of Rs 1,700, given its strong order inflow, promising pipeline, and margin tailwinds. The stock trades at a P/E of ~21.5x its FY2026E EPS," said Sharekhan.

VA Tech Wabag Limited operates in the water treatment sector. The company's primary activities are the design, supply, installation, building, and operational management of drinking water, wastewater treatment, industrial water treatment, and desalination facilities. It offers solutions for potable water treatment, industrial and process water treatment, water reclamation, desalination of seawater and brackish water, municipal wastewater treatment, industrial wastewater treatment, and sludge treatment.