Multibagger Jhunjhunwala stock hits record high for second straight session, what's next?

Shares of multibagger VA Tech Wabag hit record high for the secodn straight session on Friday. The stock has been seen shor-term buying with the scrip rising 6% in a week. VA Tech Wabag stock climbed 5.11% to a fresh high of Rs 1444 in the current session. In the previous session, the multibagger stock touched a record high of Rs 1424.60 on BSE. The stock also breached the Rs 1,400 mark intraday for the first time ever on Thursday. 

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

Market cap of VA Tech Wabag climbed to Rs 8720 crore. The stock has gained 204% in a year and risen 404% in two years. It has climbed 111% in six months. 

A total of 0.47 lakh shares of the firm changed hands amounting to a turnover of Rs 6.70 crore on BSE. VA Tech Wabag stock has a one-year beta of 1, indicating average volatility during the period.

The stock fell to a 52 week low of Rs 436.35 on October 12, 2023. 

Brokerage ICICI Securities is bullish on outlook of the stock. It has 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.

Axis Securities is also bullish on the JhunJhunwala stock. It has initiated coverage with a 'Buy' call and a target price of Rs 1,700 per share. 

It sees 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.

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.