Va Tech, Welspun: Stocks to benefit from Yamuna Rejuvenation; check price targets

Domestic brokerage firm Ashika Institutional Equity Research sees a handful of stock investing as imminent opportunities for the investors from water treatment players, who can be the potential beneficiaries from Yamuna s rejuvenation, which continues to be one of the core promises of BJP, which has come to the power in the national capital.

Hours after taking the oath as Delhi’s Chief Minister, Rekha Gupta, along with her cabinet colleagues, performed an 'Aarti' at the Yamuna ghat, signaling the government's commitment for its rejuvenation. The BJP's emphasis on cleaning the Yamuna led to massive electoral success (with winning of 9 out of 15 constituencies) along the river belt in the recent assembly election.

This policy focus is likely to drive higher investment in water treatment and infrastructure projects, creating huge opportunities for the sectoral players, said Ashika in its recent note. The Namami Gange scheme has driven significant progress in wastewater treatment over the past decade, despite execution and sustainability challenges, it said.

"While Delhi generates 800 MGD of wastewater, the government claims treatment of 550-600 MGD wastewater. Despite more than 30 sewage treatment plants (STPs) and over 12 common effluent treatment plants (CETPs), contamination level in Yamuna from Palla (Delhi) to Asgarpur and UP remains dangerously high in terms of total suspended solids (TSSs), chemical oxygen demand (COD), biological oxygen demand (BOD) and fecal bacteria," said the brokerage firm.

However, 15-20 out of 37 STPs in Delhi fail to meet pollution standards, resulting in rising contamination in the Yamuna river Further, rising pollution in drains leads to recontamination, as wastewater flows through poorly maintained pipelines before reaching the river, said Ashika.

"We expect STP tenders worth Rs40bn, while the total opportunities (including interception, diversion, and piping projects) are likely to expand to Rs 10,000 crore. This could add 1,000-2,000 MLD of new STPs/CETPs. We also expect some improvement in capex for the treatment process of existing STPs, which are non-compliant to CPCB norms" it said.

Ashika has picked VA Tech Wabag Ltd in mid-to-large size STPs space with a target price of Rs 1,994, signaling at 43 per cent upside, and Jash Engineering Ltd with a target price of Rs 775, suggesting a 36 per cent uspide. "We also like Welspun Enterprise Ltd as an emerging company, while we prefer Enviro Infra in small size STPs and CETPs space," it added without rating these stocks.