This Jhunjhunwala stock can rise another 28%, triggers behind the rally

Shares of VA Tech Wabag, which have rallied 1,171% in five years are set for more upside, according to Motilal Oswal Financial Services. The multibagger stock has received a buy call from MOSL, with a price target of Rs 1,900. This amounts to a 28% upside from the previous close. 

The company in which Rekha Jhunjhunwala has stake is likely to see robust growth ahead on the back of a strong order book, improving margins and return ratios, and healthy FCF generation, making VA Tech Wabag a cash-rich company. 

Rekha Jhunjhunwala, wife of late ace investor Rakesh Jhunjhunwala, held 8.04% stake in the water treatment firm in the June 2025 quarter. 

VA Tech Wabag stock gained 2.25% to Rs 1,519 in the current session. Market cap of the firm climbed to Rs 9380.25 crore. A total of 0.13 lakh shares of the firm changed hands amounting to a turnover of Rs 1.90 crore on BSE. 

The stock has gained 518% in three years and risen 1,171% in five years. 

VA Tech Wabag stock has a one-year beta of 1.3, indicating very high volatility during the period.

The stock hit a 52 week low of Rs 1109.35 on January 28, 2025 and a 52 week high of Rs 1943.45 on December 9, 2024. It has risen over 35% from 52-week low. 

In terms of technicals, the relative strength index (RSI) of VA Tech Wabag stands at 50.1, signaling it's trading neither in the overbought zone nor in the oversold zone. VA Tech Wabag shares are trading higher than the 5 day, 10 day, 20 day, 50 day, 100 day, 150 day and 200 day moving averages.

MOSL said any large order inflows and a major expansion in margins could drive valuation re-rating in the medium term.

Detailing its stance on the bullish outlook, the brokerage said, "Despite being eligible to execute large critical projects globally, it is selective in bidding (focus is on margins and cash flows) and has a win ratio of 25-30%. The focus is clearly visible in its FY21-25 revenue/EBITDA/PAT CAGR of 4%/ 18%/28%. We estimate a CAGR of 17%/22%/23% over FY25-28E."

The current order book of Rs 13,700 crore (4.2x FY25 revenue) and a strong bid pipeline of up to Rs 20,000 crore provide 15-20% revenue growth visibility for the next 3-4 years, as guided by the management said the brokerage. 

"Its focus on executing large-scale projects in high-margin segments such as EP (aims 1/3rd mix in EPC) and O&M (18%/39% mix in revenue/order book, 5-20 years execution cycle) augurs well for margins. We expect VATW to sustain strong FCF generation with an average of INR3.5b annually over FY25-28E, given its robust operating performance and scope for further improvement in the working capital cycle. Over FY25-28E, we expect further expansion in RoCE (from 20% to 24%), RoE (from 14% to 16%), and RoIC (28% to 39%), above its guided range," added MOSL. 

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.