This Jhunjhunwala stock hit record high, rose for fifth session today; here's why 

Shares of VA Tech Wabag hit their record high, rising for the fifth straight session on Tuesday. The rally in the Jhunjhunwala stock came after the firm said it secured a mega order Rs 1,000 crore toward 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 climbed 4.39% to Rs 1743.85 today against the previous close of Rs 1670.45 on BSE. Market cap of VA Tech Wabag climbed to Rs 10,528 crore. The multibagger stock has gained 284% in a year and risen 549% in two years. A total of 0.18 lakh shares of the firm changed hands amounting to a turnover of Rs 3.12 crore on BSE. VA Tech Wabag stock has a one-year beta of 1.1, indicating high volatility during the period. 

Rekha Jhunjhunwala, wife of late investor Rakesh Jhunjhunwala held 50 lakh shares or 8.04% stake in the firm at the end of the June 2024 quarter. 

VA Tech Wabag stock has a one-year beta of 1.1, indicating high volatility during the period. The stock fell 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 years Operation and Maintenance (O&M) contract. This plant will be built with the 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," said Va Tech Wabag. 

Brokerages are mostly bullish on outlook of the multibagger stock. 

Axis Securities had initiated coverage on the stock with a price target of Rs 1,700 per share which was met 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. 

Axis Securities expects strong industry tailwinds, improving profitability, robust order book, and expanding offerings for the firm, said the brokerage. The stock currently trades at 18 times FY26E EPS but Axis Securities values the stock at 23 times FY26E EPS.

Another domestic brokerage ICICI Securities is bullish and assigned a buy call with a price target of Rs 1,541 against the earlier target of Rs 1,445.

Wabag has shed the flab, cleaned up its balance sheet and improved its margin over the last 24 months, said the brokerage. 

"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 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 brokerage Sharekhan had assigned a price target of Rs 1,700 to 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 is engaged in the water treatment field. The company's principal activities include design, supply, installation, construction and operational management of drinking water, waste water treatment, industrial water treatment and desalination plants. It provides solutions for drinking water treatment, industrial and process water treatment, water reclamation, sea and brackish water desalination, municipal waste water treatment, industrial waste water treatment and sludge treatment.