What we have observed that from previous year's high, the stock retraces 50% and again gives 50% returns from the previous year retracement. The stock made that Rs 124-125 bottom. We feel the stock will again go and test the Rs 200-220 level.
If I take a fundamental call, the company is a pioneer into water treatment and sanitation. Solid waste management and energy will be the flavour for next at least eight-ten years because at least one-third of the urban population is still not having access to purity of water. I think this is one business that will be definitely looked by large players. Given the interest of larger players into the stock, I think the target from a year's perspective is also achievable.
The company has given a guidance of close to Rs 10 billion order book that is almost Rs 1,000 crore, from current sales of Rs 500-525 crore. I think even if they are able to get Rs 800 crore, the company will make and EPS of close to Rs 12-13 mark in two years time frame. The company trades in a PE band of 14-26 times. It is highly volatile and thus we recommend a very small quantity into the stock.
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