Low PE and Moat Stock: Rakesh Jhunjhunwala backed small-cap stock secures repeat order!

Let us first disclose the stock's name and then delve into the catalyst driving its growth.

Thursday proved to be a peculiar day, as benchmark indices logged healthy gains. More intriguingly, one Small-Cap stock caught the attention of investors, and the catalyst behind its upswing was worth pondering. Let us first disclose the stock's name and then delve into the catalyst driving its growth.

The stock in question is Va Tech Wabag Ltd. WABAG stands as a global leader in the water industry, boasting a rich history spanning over 99 years. As a pure-play water technology multinational, WABAG offers a comprehensive range of technologies and services for Total Water Solutions in both Municipal and Industrial sectors. With a workforce of over 1,600 water professionals spread across 25 countries on four continents, WABAG touches the lives of millions every day.

On Thursday, the stock price surged by more than 4 per cent. At one point during the day, the stock reached an intra-day high of Rs 521.45. The primary catalyst behind this surge was VA TECH WABAG (VVABAG'), a leading pure-play water technology Indian Multinational Group. It reinforced its market leadership in Tunisia by securing a consortium Design, Build, Operate ('DBO') repeat order for the 345 MLD Bejaoua Drinking Water Treatment Plant, valued at about 215 million Tunisian Dinars (approximately EUR 63 million), from Societe Nationale D'exploitation Et De Distribution Des Eaux (SONEDE).

WABAG's exceptional track record with SONEDE for more than two decades, coupled with a technically superior and competitive bid, assured this repeat order win, solidifying WABAG's market position in the North African region. The project, funded by the French Development Agency (AFD) and the European Investment Bank (BEI), will be executed over a thirty (30) month period, followed by the operation and maintenance of the plant for twelve (12) months.

Under this order, WABAG's scope will encompass Engineering & Procurement (EP') and Operation & Maintenance ('O&M'). This accounts for about half of the consortium order value and includes the design, engineering, and supply of electromechanical equipment, such as modern and compact Lamella Clarifiers, along with the installation and commissioning of the plant. A one-year O&M period follows.

The project will be led by WABAG as the consortium leader, with Entreprise Gloulou Mohamed et Salem (EGMS), the consortium partner, responsible for all civil works associated with the project.

Over the past year, the stock has surged by nearly 87 per cent, and it currently trades at a PE ratio of 10.8x. Notably, Rekha Jhunjhunwala, the wife of the late Shri Rakesh Jhunjhunwala, holds an 8.04 percent stake in the company.

Disclaimer: The article is for informational purposes only and not investment advice.