1. This small-cap laggard is HDFC Securities’ pick of the week

This small-cap laggard is HDFC Securities’ pick of the week

HDFC Securities has picked VA Tech Wabag in its ‘Pick of the week report’. The shares have underperformed the BSE Smallcap index with returns of 36.5% since January.

By: | Published: September 19, 2017 3:37 PM
  VA Tech Wabag shares closed at Rs 639 on NSE this afternoon, down by more than 0.15% since the previous close. (Image:Reuters)

HDFC Securities has picked VA Tech Wabag in its ‘Pick of the week’ report. The shares have underperformed the BSE Smallcap index with returns of 36.5% since January. The BSE Smallcap index is up by 40% in the same period. Notably, the shares have lost nearly 10% in the last one month. The shares were trading at Rs 642.5 on NSE this afternoon, up by more than 0.3% since the previous close. HDFC Securities has a target price of Rs 780 on the stock with a timeline of 3-4 quarters.

HDFC Securities says that VA Tech Wabag is a lucrative investment as the company has a continuous flow of new orders, excellent project execution track record, a marquee clientele, and a financially strong balance sheet. Va Tech Wabag Ltd consolidated revenue for the quarter stood at Rs. 668.6 crore a 15.2% increase as compared to the consolidated revenue in the previous quarter. This was primarily driven by 21% yoy increase in revenues from rest of the world segment. EBITDA for the quarter rose by 44.6% yoy to Rs. 46.3. EBITDA margin for the quarter stood at 6.9%. This margin expansion was aided by favourable movements in inventories.

VA Tech Wabag in a multinational player in the water treatment industry with presence in India.  According to HDFC Securities’ report, the company offers a comprehensive range of technological solutions in over 20 countries.

Karur Vysya bank which has returned more than 92% since January, is the other smallcap in HDFC Securities ‘Pick of the Week’ report. The brokerage firm has advised the investors to buy the stock with a target price of Rs 181. The scrip was trading flat at Rs 159.10 this afternoon. According to the research firm, Karur Vysya Bank has consistently maintained comfortable capital adequacy, backed by regular capital infusion through rights issues and moderate internal accruals. HDFC Securities says that slippages should decline going forward, as the bank has already restructured a major portion of troubled assets.

 

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