Water distribution stocks in trouble? Concord Enviro, EMS to VA Tech under pressure- reason behind sell-off, outlook

New Delhi, Sept. 16 -- Shares of water distribution and recycling stocks faced heavy selling pressure during Wednesday's trading session. Concord Enviro Systems Limited, EMS Limited, Taylormade Renewables Limited, VA Tech Wabag Limited, Ion Exchange India Limited, etc stock fell as much as 5.6%.

The recent decline in stocks has come as the sector is getting caught in a second straight session of small-cap profit booking. Additional factors like government payments timeline under the Jal Jeevan Mission 2.0 transition, may also be weighing on the sector, according to experts.

"Water stocks are falling today, likely due to broader small-cap profit booking and continuing concerns over slower government payments during the JJM 2.0 transition, where states must now clear reform conditions before funds are released," explained Tushar Badjate, Director of Badjate Stock & shares Pvt Ltd.

Concord Enviro Systems share price was trading 5.69% lower at Rs.260.95 per share on BSE at 2 pm on Wednesday. EMS Limited stock was down 3.5% lower at Rs.360.8 per share, Taylormade Renewables share price was trading 4.83% lower at Rs.56 per share. Shares of VA Tech Wabag were trading 2.4% lower at Rs.2052.75 per share. Ion Exchange India stock was down 1.27% lower at Rs.426.05 per share.

Despite the short-term decline, experts remain constructive on the sector while remaining positive on quality names, and remaining cautious on others.

" The long-term theme remains strong (JJM extended to 2028, Rs.8.7 lakh crore outlay), but we prefer quality: VA Tech Wabag (strong Q1, Rs.17,200 cr order book, global desalination exposure) and Ion Exchange on dips. EMS carries payment-cycle risk, while Concord Enviro and Taylormade remain weak on earnings, so caution is advised there," explained Tushar Badjate.

Geopolitical tensions like the West Asia crisis, can also impact these sector companies' growth outlook.

"We remain constructive on quality names like Wabag. De-escalation since the April ceasefire has reopened the Gulf awarding pipeline, and Wabag has converted it: a maiden mega desalination order in Kuwait and a large plant in Ajman. For a company like this, a correction changes the price, not the thesis," stated Gaurav Garg, Head - Research, Lemonn. Published by HT Digital Content Services with permission from MINT. For any query with respect to this article or any other content requirement, please contact Editor at contentservices@htdigital.in