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Saturday, December 10, 2011

VA Tech Wabag - Potential Multibagger

Why I think VA Tech Wabag could be a mulitbagger (I hold the stock from IPO)

Population Growth + Climate Change will lead to water shortage, across the world

In India, more so, because both are happening at a fast pace

By 2025 (according to Scientific American), demand for water could rise upto 120% in most of India

Basically, what that means is that, we won't have water, but demand is there for it

In order to get that water we need, we will have to either -

1) Increase the price of water to reduce demand (won't work!) ..

2) Conserve Rain Water (possible, but can Climate have a devastating effect?)

3) Irrigation techniques (Jain Irrigation to benefit)

4) Finally, companies like VA Tech Wabag, which take Salty water and generate fresh water from them

With the technologies that convert salty water (97% of water is salty) to fresh water not so easy to replicate,...Companies like VA Tech Wabag, given the right cost and techniques could benefit hugely

India has a large part of its land surrounded by water and setting up these plants would not be isolated either

Again, the potential to be a multibagger is there, it remains to be seen whether execution & investment are coming in from Govt

All the above points were Tweeted