Ion Exchange (India) Limited

Rajesh sharma Interview


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EC clearance for the chemical segment on the way, construction should start.


Ion exchange had about 2500 Cr engineering order book at end of FY 23.
order in bids ~8500 (assuming a 10% conversion rate, we get new orders worth ~800 Cr).
So total orderbook for enginereing alone stands at ~3300 Cr.
How long does it take for orders to be recognised as revenue on average ?
Can we assume that all of this is recognised in the next 4 years ?

Now Engineering has been about 55-60% of overall revenue so we can assume that apart from this, chemicals and consumer will contribute about 1000 cr over the next 3 years (Assuming 30% of overall revenue).

So are we looking at close to 4000-4500Cr revenue by Fy 27?
That’s a really good growth rate at approximately 25% every year, which seems too good to be true.

What am I missing here?

I’m guessing enginereing growth rate is much higher than chemicals (which is growing at about 10%).
Even then , if chemicals and consumer can generate about 600Cr by FY 27 and Engineering can recognise ~3000 cr, that’s still about 3600-3800 Cr revenue which is a good 20% annualised growth

tracking - not invested

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ion exchange is an incredibly amazing company, no two-ways about that however valuations are surpassingly piercing through the roof. moreover fundamentally speaking, one must not ignore the fact that engineering/water division which contributes about ~70% (q4fy23) to overall revenue pie got ferociously impacted as margins in the said segment nosedived ~1050 bps and the same is likely to weigh negatively in the ensuing quarters too!!

lopsidedly overvalued — its high time fellow investors

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Sir I feel that most investors are awaiting their chemical resins plant capex to come onstream. Environmental Clearance has finally come, so it will take a year for the chemical plant to commercialize. Resins is high margin and ROCE, it’s a moat. Order inflow is strong so expect the water treatment segment to do well. Really wish they hived off the consumer biz which is a drag. If we look at numbers on a 2 year forward basis from here, I think the stock is at a slight premium and definitely a hold and by no means a buy at CMP.

Va Tech Wabag new CEO seems enterprising and I am bullish on their growth prospects. Valuations are favourable too in comparison to Ion.

Disc - My firm has recommended both Ion and Va Tech Wabag under our service. Va Tech Wabag is a part of our smallcase so I am biased.


How is the business model of Ion Exchange and Va Tech Wabag differnciated (excluding Chemical and Cusotmer Buisness).
Ion Exchange’s comprehensive water treatment & wastewater treatment solutions extend from influent water through potable and industrial process water; sea water desalination process, process separation, purification and catalysis; industrial effluent treatment, water reuse & zero liquid discharge and waste to energy solutions. Ion Exchange’s predesigned and pre-engineered water treatment, waste treatment and process water and non-water purification systems cater to a wide range of industries, institutions, communities, municipal & infrastructure segments.

Ion exchange is into Engineering business … so from where do they get done the PC part.

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My notes from 2023 Annual report for Ion Exchange:

  1. Internationally serving - 80 countries
  2. Exports ~ 20% of Sales
  • India’s demand for water is projected twice as much as the available supply by 2030. According to Frost & Sullivan report, the Indian water and wastewater treatment market will likely reach $2.08 billion by 2025 from $1.31 billion in 2020, registering growth at a compound annual growth rate (CAGR) of 9 percent.
  • Robust governmental initiatives, such as the:
    • Atal Mission for Rejuvenation and Urban Transformation,
    • National Mission for Clean Ganga,
    • Jal Jeevan Mission, and
    • Community Drinking Water Schemes will contribute to the growth of the Indian water and wastewater treatment market.
  • growing regulations by the regional Government to prevent pollution of naturally occurring water bodies and illegal wastewater discharge have boosted the market growth.
  • Industrial sectors Power, Food and Beverages, Chemicals, Pharmaceuticals, Steel, Refineries and Textile industries prefer advanced treatment technological systems such as reverse osmosis membranes for treating their wastewater. The concept of wastewater recycling and zero discharge systems is becoming more widely accepted as newer technologies such as membrane bioreactor (MBR) based treatment gain in adoption.
  • Industries are also setting up sea water desalination plants to meet process water requirements. The coastal states of Tamil Nadu and Gujarat are frontrunners in setting up desalination plants to bolster drinking water supply.
  • Rapid industrialization, deteriorating quality of surface and ground water has increased the demand for pure and safe water in residential, institutional and community segments.
Sr. No. Description of Main Activity Description of Business Activity % Of the Turnover of the entity
1 Engineering Segment Provides comprehensive and integrated services and solutions in water, wastewater treatment & solid waste management to industries & communities. This includes advanced Membranes & their applications in Sea Water desalination, Recycle, Zero Liquid Discharge, purification & concentration of process stream and integrated waste to energy systems with comprehensive operation and maintenance services. 61%
2 Chemical Segment Provides widest range of ion exchange resins, adsorbents, speciality process chemicals and customized chemical treatment programmes for various utility applications. 29%
3 Consumer Product Segment Caters to individual homes, realty, institutions like hotels, educational institutes, hospitals, railway and defence establishments, laboratories etc. To provide pure & safe drinking water and sustainable waste management. 10%


  1. Engineering
  • The year has seen increase in sales profitability, order inflow from both domestic and international markets. It also has a healthy order backlog and bid pipeline from core industries like Oil & Refining, Steel, Infrastructure & Chemicals and OEMs in renewable energy domain, apart from Food & Beverages, Pharmaceuticals, Automobile & Components, to name a few.
  • The service business also reported a healthy growth in the post Pandemic period.

With these the segment has visibility for sustaining growth in the next 2-3 years.

  • The execution of Sri lanka project remained significantly affected and the company has engaged in discussions for expediting the project closure on a mutually acceptable terms.
  • On the other hand, execution of UP Jal Nigam project progressed satisfactorily and revenue has been recognised based on work completion.
  • The Membrane Division continued to deliver a double- digit growth in its top line with proportional growth in the EBITA margins. The success of its range of world-class membranes (RO, NF) and earlier than planned capacity expansion during the year, will help to further increase our market share in India and increase export of membranes to geographies where we have global presence.
  1. Chemical Segment
  • sales in the domestic segment continued to record steady growth
  • the export volume remained muted due to geo-political issues and recessionary trends in global markets, particularly US and Europe
  • Segment witnessed improved margins aided by softening and stability of input costs.
  • Consistent with increased demand for ion exchange resins, we have announced a greenfield expansion project for manufacturing world-class ion exchange resins in Roha, Maharashtra.
  1. Consumer Products

a. Home water solutions

  • The Consumer Products segment comprises of Home Water Solutions, Institutional, Commercial Water Solutions and Rural Sales Division.
  • It was a path-breaking year for Zero B Home Water Solutions which had significant growth in its revenue and profits.
  • Sustained product innovations, commercial success of its Zero B Hydrolife range of top end product and Smart Digital initiatives in sales and services contributed to the growth.

b. Institutional segment

  • The Institutional segment which caters to the requirement of Realty, Hospitals, Hospitality, etc. also registered good growth in its topline as compared to the previous year. High and differentiated product solutions like INDION HEMO (High Purity Water for Dialysis system), INDION QUENCHER (System for packaged drinking water in glass bottles with an aim to eliminate single-use plastics) and a wide range of Sewage Treatment Plants, contributed to the vertical’s performance.

c. Commercial Water segment

  • In the Commercial Water segment the new Water Cooler models with unique features of purified water dispensed at three temperature variants (normal/warm/cold) received good response contributing to this segment’s growth. The LAB Q “Ultra Plus”, and High Purity Water systems for research laboratories and institutes requiring ASTM type-1 water registered good growth.

d. Rural Segment

  • In the Rural Segment your Company continues to grow through its participation in various Government initiatives such as the Jal Jeevan Mission as well as with its association and support to non-government organizations and companies under their CSR activities.

Exports ( 394 Crores for FY 23) - Having built a favourable position as a reliable exporter of quality ion exchange resins, two of its important markets, namely North America and Europe continued to be constrained due to economic and geopolitical reasons.

  • On the Engineering front, the company witnessed steady order flow in the international market. It includes a 40 MLD Seawater Desalination project for a leading EPC company in North Africa

Digital: your Company launched their new Corporate ( and Hydramem ( websites which were stronger in functionality, appearance and navigation. Development of the new regional websites for Asia Pacific, Africa, Europe, India, Middle East and North America widened our marketing and sales reach to global customers.

Risks and mitigation:

  • Company continued with its reassessment of short-term and long-term impacts of the geopolitical war and Covid cases in China and slow down in Europe - preferred to “strengthening of domestic manufacturing capabilities”.
  • your company resorted to building capabilities in the countries of interest by investing in business and manpower abroad.
  • In order to cash in on the growth opportunities in the Indian markets and to offset the impact of uncertainties, your Company continued to build a good order bank of profitable businesses.
    • Unprofitable or highly volatile opportunities were declined
    • continued to maintain a healthy mix of profitable and relatively stable stream of revenues from the engineering, chemical and home segment along with a good opening order bank

Ion exchange update
(From credit rating 2023 and investor presentation)



1…Order book

=The engineering segment had orders worth Rs 3,351 crore as on June 30, 2023, with strong bid pipeline of ~Rs 8,500 crore offers strong revenue visibility

2…Recent acquisition

=Recent acquisition of a Portugal based company MAPRIL (acquisition completed in Q1FY2024 at a total consideration of ~Rs 24 crore, funded from internal accruals), will provide better access to the European market and increase the product offerings in chemical division.

3…Greenfield expansion

=Greenfield expansion in the chemical division for Resins manufacturing in Roha, Maharashtra with an estimated capex outlay of ~Rs 400 crore (to be funded in the debt equity ratio of 4:1), to be phased out in fiscal 2024 and fiscal 2025, the debt tie-up is already in place.

=The company’s ability to commission the Roha project within the budgeted cost and estimated timeframe, stabilize the facilities and ramp up sales post commissioning would be a key monitorable.

4…Market potential


= Study by the Central Pollution Control Board (CPCB) has revealed that almost72,368 MLD of sewage is generated across urban India and there are just 1,093 STPs installed that treat 31,841 MLD or 44% of sewage per day

=• In India only 60% of industrial
wastewater is treated.
• Around 40% of the STPs do not conform to the environment protection

C…Nal se jal

=Following the announcement of the
‘Har Ghar Nal se Jal’ scheme on August 15, 2019, it has provided tap water
supply to more than 12 crore rural

= At the time of announcement of the Mission, out of 19.27 crore households in the country
only 3.23 crore (17%) had tap water


=Namami Gange” the clean Ganga
initiative, can create significant

=INR 200 bn (USD 3 bn) has been pledged by the government over the next five yearsto clean up the Ganga.

5…After sale services
=Longstanding presence of the promoters and a robust nationwide aftersales service have helped the group to establish the brand.

Disc…invested since 2020


Pretty Good result:

I know few popular investors and funds have reduced their stakes of late concerning over valuations.

Disclosure: Considering the current quarterly result i will stay invested.


P/BV is very high according to current market price.

The Chemical segment is very profitable, and the upcoming CapEx @ Roha, Orissa worth of Rs 400 Cr will be capitalized in FY26.The Fixed Assets Turnover in this segment at 1.8x-2x at peak level.


I am analysing Ion exchange result. The ROE and ROCE is very good for the company and PE is in good range, not too over valued.
company has a consumer product business which is consistently loss making.
the chemical business is the cash cow. I am not sure, why company is not taking steps on the consumer business. it is in loss since 2014.
i need to analyse further. Have not taken any position yet. but curious.

They don’t do advertisement but are doing innovations in consumer products .The consumer prd. division is about to break even in quarter or two.

Water.pdf (1.9 MB)

Useful report to understand Water business in India.


Any particular reason there has been continuous sell-off ?

yes, same question from my side. is the promotor selling off its stake ?

It is fairly overvalued!! And it has gone up significantly before this selloff!! also in last concall it was mentioned that they see a slight slow down in order pipe line along with slow down in engineering division!!

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Why their Tax rate is too high, can anyone explain

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