Ion Exchange (India) Limited

Stock Opportunities
173

Q1 FY25 Financial Performance:

  • Consolidated operating income: ₹5,676 million, up 18% YoY.
  • EBITDA: ₹641 million, representing a 31% YoY increase; EBITDA margin: 11.29%.
  • Net profit: ₹448 million, a 35% YoY increase; PAT margin: 7.89%.

Segmental Performance:

1. Engineering Division:

  • Revenue: ₹3,235 million, a 13% YoY increase.
  • EBIT: ₹188 million, up 26% YoY.
  • Steady order inflows for medium-sized jobs; robust domestic enquiry bank.
  • Total order book: ₹3,394 crores.
  • Execution of international contracts contributed to improved turnover.
  • Expecting increased pace of execution for larger EPC jobs in upcoming quarters.

2. Chemical Segment:

  • Revenue: ₹1,994 million, a 36% YoY increase.
  • EBIT: ₹498 million, also up 36% YoY; maintained steady margins.

3. Consumer Division:

  • Revenue: ₹660 million, a 9% YoY increase.
  • Reported a loss of ₹34 million, compared to a loss of ₹15 million YoY.
  • New product launches gaining market acceptance.

Order Book and Execution Insights:

  • Engineering division’s UP contract expected to be substantially executed by the end of FY25, dependent on fund releases and government approvals.
  • Current residual value of UP project: ₹813 crores; Q1 execution: ₹26 crores.
  • Anticipated significant improvement in execution from Q2 onwards, post-election-related cash flow impacts.

Management Changes:

  • Transitioning to Non-Executive Non-Independent Directors for certain management members to facilitate professional management and support growth.
  • CEO to assume role of Managing Director as part of planned management transition.

Strategic Focus and Market Positioning:

  • Positive outlook for the chemical segment; aiming for 15% growth, contingent on stable input prices and foreign exchange dynamics.
  • Ongoing capacity expansion in resins and chemicals targeted at international markets.
  • Enhanced focus on R&D and innovation to drive profitability and competitive edge.

Challenges and Headwinds:

  • Legacy project continues to impact margins; expected to taper out after Q2 FY25.
  • Execution delays attributed to election-related funding uncertainties.
  • Management remains cautiously optimistic about future order inflows and revenue growth.

Future Growth Prospects:

  • Anticipating substantial revenue growth from international markets, particularly in North America and Europe.
  • Continued investment in technology and capacity expansion to enhance profitability.
  • Maintaining a robust enquiry pipeline with ongoing evaluations for large engineering projects.

CAPEX and Expansion Plans:

  • Resin project nearing commercial operations expected in FY26; 3-4 years to reach optimum capacity utilization.
  • Expansion initiatives in Orissa for backward integration and capacity augmentation.
4 Likes
174

Company has been awarded Contracts from Adani Power Limited for Comprehensive & Complete
Total Water & Environment Management Solution valued at approx. INR. 161.19 Crores for
Process & Utility required of 2 x 800 MW units for Raipur & Raigarh Ultra Super Power Projects.
The projects are to be completed within 18 months from Project Award dates.

3 Likes
176

Takeaways from Q4 2025 Earning call

  • Engineering division faces significant execution and profitability headwinds, especially from UP order.
  • Consumer segment remains a loss-making division.
  • No clear outlook given for FY26 – management will reassess post H1.
  • Interest outflow expected to increase in FY26 as ~₹320 Cr debt (80% of ₹400 Cr capex) starts hitting P&L due to Roha’s commissioning and end of capitalization phase.
  • Only encouraging factor currently is Roha plant – expected to improve utilization, chemical segment revenues, and margins.
  • Expecting Further Valuation de-rating if Roha plant scale-up or execution recovery doesn’t materialize in H2 FY26.
3 Likes
177

Yes. But once they are out of the UP & Sri Lankan project, the Engg division may improve. However the dark horse is the Chemicals division and the Roha Plant. When everyone is focusing on EPC & order book , this company has water treatment chemicals which is Key factor. But imho this will test the investor patience till the clarity emerges from Engg.

Disc: Invested

2 Likes
179

It seems Nishant’s observations are correct as the share price has dived down significantly. It happened after company made Investor Presentation on 22.07.25. But I didn’t find any alarming information for this reaction. There are many good things going for the company. It has an order book of 2750 cr including Srilanka and UP project. What is more significant is order pipeline of 8500 cr. If company gets 20% converted to firm order, it will be almost 1700 cr further order. Another significant factor is the commencement of production at Roha resin plant in Q2 of 25-26. Moreover, it has a professional management with good track record
One worrying factor that I have observed is continuous fall in EBITDA and Net Profit margin since 2020. Company has to attend to this. Hope it will be partly redressed in gradual reduction in depreciation on Resin plants contribution, as the company is at the end of Capex cycle.
Would like to get any information on the recent reaction in share price as I am currently examining the scrip for investment.

4 Likes
180

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