The shares of this small-cap company jumped around 7 percent after the company announced that it would receive Rs.140 crore in arbitration proceedings linked to the Telangana State Power Generation Corporation Ltd (TSGENCO) contract.
With a market capitalization of Rs. 3,050 crores, The shares of Va Tech Wabag started its Wednesday trading session on a positive note at Rs. 508. The share hit a high of Rs. 535 making a gain of around 7 percent and closed its day at Rs. 532 apiece.
Such a positive movement was observed after the company in an exchange filing mentioned that the company would receive Rs. 140 crores in the arbitration proceedings regarding a dispute arising from the contract between TSGENCO and a consortium of Tecpro Systems Ltd, VA Tech Wabag, and Gammon Engineers and Contractors.
The dispute was raised when Tecpro Systems initiated the arbitration against TSGENCO without the consent of the other consortium members, violating the consortium agreement. To resolve the issue, Retired Hon’ble Justice Madan B. Lokur was appointed as the sole arbitrator by the Supreme Court of India.
On Tuesday, the arbitration proceedings were upheld with the contention of TSGENCO, VA Tech Wabag, and Gammon stating that the individual consortium member, Tecpro Systems cannot invoke the arbitration against TSGENCO.
Furthermore, the claims made by Tecpro Sytems were rejected, and the arbitration proceedings against WABAG and Gammon were not maintainable and no relief was claimed against the two by Tecpro.
With this order, VA Tech Wabag, which was the consortium leader, is entitled to get Rs. 140 crore, which was under hold by TSGENCO due to the pendency of the arbitration proceeding.
Digging into the financial statement of the company, the company’s revenue increased by 20 percent from Rs. 552 crores in the June quarter to Rs. 665 crores in the September quarter. In addition, the net profit jumped by 20.4 percent from Rs. 50 crores to 60.2 crores during the same timeframe.
Looking at the important financial ratios, the return on equity was 0.7 percent in FY 21-22 and the return on capital employed was recorded at 4.4 percent during the same period.
According to the latest shareholding pattern, Promoters have a 19.13 percent stake in the company, the Public or Retail Investors have 61.71 percent shares, FIIs have a considerable stake of 15.64 percent shares and the remaining 3.52 percent stake is with DIIs.
Headquartered in Chennai, Va Tech Wabag Ltd was established in the year 1924. The company has expertise in water treatment and desalination for municipal and industrial users. The company has completed more than 6000 projects and is present across more than 30 countries.
Written By Vaibhav Patil
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