Ion Exchange (India) Limited
Know the Company
Ion Exchange (India) Ltd stands as a pioneering entity in water treatment industry in India, with a robust international presence. Established in 1964 as a subsidiary of the Permutit Company of the UK, Ion Exchange transitioned into a wholly Indian company in 1985 when Permutit divested its holdings. The company has over six decades of expertise in water and wastewater treatment, providing comprehensive solutions for industries, homes, and communities. Ion Exchange is renowned for its extensive range of products and services, comprising water treatment, liquid waste treatment and recycling, air pollution control, solid and hazardous waste management, and energy generation from waste.
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Ion Exchange operates across three primary business segments such as Engineering, Chemicals and Consumer divisions. The Engineering segment of the Company offers products and services including pre-treatment, wastewater treatment, water recycling, and product recovery. These solutions employ various physico-chemical processes such as settling, filtration, disinfection, membrane, and ion exchange technology. The company’s services use core industries like Oil and Gas refining, steel, infrastructure, chemicals, etc. Additionally, sectors such as food and beverages, pharmaceuticals, and automobiles are key customers.
The Chemicals segment, Company produces various compounds for the water treatment. Ion Exchange successfully introduced a range of “Green Chemistry” products aimed at enhancing the sustainability footprint of its customers. The company also launched several new ion exchange resins and adsorbents for both local and export markets.
Consumer Products segment includes Home Water Solutions, Institutional and Commercial Water Solutions with significant presence in the Zero B Home Water Solutions brand. This growth was driven by sustained product innovations and Smart Digital initiatives in sales and services. The segment also introduced innovative products such as low-cost value-added purifiers, and an extended range of domestic softeners and sand filters.
Exchange has established a strong international presence, with operations spanning across the Asia-Pacific, Africa, Europe, the Middle East, and North America. The company operates seven state-of-the-art manufacturing and assembly facilities across India, along with additional facilities in the UAE, Indonesia, Bangladesh, and Saudi Arabia. Ion Exchange adheres to the highest standards of safety and quality, with its manufacturing units being ISO 9001 certified. The Resins and Industrial Chemical units are also ISO 14001 certified, and the Industrial Chemical unit holds an ISO 45001 certification.
Strengths
Ion Exchange (India) Limited remains a leader in water and environmental management, offering comprehensive solutions that cater to a wide range of industries and consumer needs. With a strong focus on innovation, quality, and sustainability, the company continues to expand its global footprint and set industry benchmarks.
Advanced technological tie-ups
The Energy and Resources Institute (TERI) has entered into a significant collaboration with Ion Exchange India Ltd, signing a Technology and Trademark License Agreement to commercialize its patented wastewater treatment technology, TADOX, for industrial applications. TADOX is a revolutionary technology that utilizes UV-Photo catalysis as an Advanced Oxidation Process (AOP) to achieve oxidative degradation and mineralization of targeted pollutants. This technology employs novel approaches that reduce chemical usage in the treatment process, leading to a decrease in sludge generation and prevention of secondary pollution. Notably, TADOX offers a highly resource and energy-efficient treatment solution, with expected reductions of 30-40% in both capital expenditures (CAPEX) and operational expenses.
Robust order flow
In March,2024, Ion Exchange received an order worth Rs 120 crore from Saudi Arabia, which included setting up a water treatment plant, along with a de-mineralisation plant in the Middle Eastern country. The international contract was awarded to the Ion Exchange by one of the largest mining companies in Saudi Arabia, Maaden. Ion Exchange received another order from Material Construction in the UAE for a project, In April,2024. The contract value of the project stands at Rs 250 crore, excluding any taxes. As per the details of the project, Ion Exchange will have to engineer, manufacture, deliver to the site, conduct supervising of the erection, commission as well as start the work of desalinated water unit.
As per the recent management communication, the engineering segment witnessed strong international order inflows during the quarter ended March,2024. The domestic enquiry also robust, and the Company is hopeful that the finalization of some of the large value opportunities would accelerate in the next few months. At the end of the financial year, March 2024, the total outstanding order book for Engineering division stood at Rs. 3,546 crores.
The bid pipeline, estimated at around Rs. 8,000 crores is primarily directed towards the private sector and public sector undertakings (PSUs), with the government and municipal sectors representing an insignificant portion of the pipeline. As of the end of March 2024, the international order book accounts for approximately 27% of the total.
Financials
ION exchange reported Consolidated quarterly revenue of Rs 782 crore in March 2024 up 21% from Rs. 647 crores in the same quarter of the previous financial year. Net Profit for the period stood at Rs. 73 crores, down almost 11% from Rs. 82 crores in March 2023. EBITDA stands at Rs. 109 crores in quarter ended March 2024, down by 2.5%.
For the financial year ended March 24, on a consolidated basis, the operating income stood at Rs. 23,48 crores, an increase of 18% year-on-year. The EBITDA stood at Rs. 2,72 crores, an increase of 6.7% year-on-year, and the EBITDA margin was reported at 11.5%. The profit after tax was Rs. 1,95 crores, which was almost flat from the FY2023.
Capex for Sustainable Growth
ION Exchange expects the commercialization of its Roha facility for chemicals and resin manufacturing will be in FY 2025-26. The majority of the capital expenditure will be allocated this year, with the overall Capex for Roha is estimated at almost Rs. 400 crores. The total Capex for the current year is approximately Rs. 115 crores, primarily directed toward the Roha plant for resin expansion.
Additionally, the Company has undertaken routine maintenance Capex in the Chemical segment for its existing facilities and enhanced Engineering facilities.
The company is making significant investments in its consumer business, though it is making negative bottom-line. However, this segment’s topline growth is encouraging. Company management is keen to deploy any surplus generated is reinvested to increase volumes to a much higher level. This strategy has yielded benefits during the latest reported quarter. The company plans to continue investing in ramping up volumes, with the hope of achieving a positive bottom line soon.
Subsidiaries Merger for Operational Synergy
For the Consumer division segment, the merger process with its two Indian subsidiaries, Global Composites and Structural Limited and Ion Exchange Environment Management Limited, was successfully completed in the March.2024 quarter. The merger application for Ion Exchange Project and Engineering Limited was withdrawn but will be considered for refiling in due course.
Bright Outlook
Most of the countries across the globe facing significant water scarcity issues, exacerbated by population growth, as well as polluted by industrial and agricultural runoff. India’s water and wastewater management sector also facing critical challenges due to the country’s limited freshwater resources, which constitute only 4% of the global supply while supporting 18% of the world’s population. This disproportionate distribution creates significant water scarcity issues, making the availability of safe drinking water essential for the health and well-being of India’s vast population. In response, the Indian government has prioritized robust initiatives such as the Atal Mission for Rejuvenation and Urban Transformation, National Mission for Clean Ganga, Jal Jeevan Mission, and Community Drinking Water Schemes. These programs aim to enhance the country’s water infrastructure and management systems, underscoring the vital role of effective water and wastewater management in ensuring public health, economic stability, environmental sustainability, and social equity (source: Company AR).
The water and wastewater management sector in India looks promising with water demand projected to double the available supply by 2030, there is an urgent need to address this emerging crisis. The growth of this market is further bolstered by increasing regulations aimed at preventing the pollution of natural water bodies and curbing illegal wastewater discharges. Governmental efforts to regulate and provide funding, coupled with incentives for private investment, are opening up significant opportunities for market expansion.
To address the water requirement of growing population and the imbalance in freshwater supply, large Indian cities are planning wastewater treatment facilities with active private sector participation. Key industrial sectors, including Power, Food and Beverages, Chemicals, Pharmaceuticals, Steel, Refineries, and Textiles, are increasingly adopting advanced treatment technologies for wastewater treatment. Additionally, industries are investing in seawater desalination plants to meet their water requirements. All of these projects are, hopefully gives immense opportunity for Ion Exchange’s product and services.
The increasing demand for pure and safe water, driven by rapid industrialization and deteriorating water quality, has fueling growth in the Indian home water purifier market, making it the largest in the Southeast Asian region, where ION Exchange having strong presence and it continuously investing.
Risk Factors
Drinking water issues are prevalent in many countries worldwide, making the water treatment industry a high priority for governments. However, the industry requires significant capital investment, so, economic downturns or changes in government spending priorities can adversely affect orders for this industry. Additionally, delayed payments from state government bodies, which are notorious for such issues, may affect the working capital requirement of companies in this sector.
The water treatment industry is experiencing rapid technological advancements. Companies must continuously invest in upgrades and innovations and adopt the latest technologies to remain competitive also a challenge.
Sector: Utilities
Market Price: Rs. 722.20 as on today
FV: Rs 1/-
Stock Name: Ion Exchange (India) Ltd
BSE Code: 500214, NSE Code: IONEXCHANG
Market Cap.: Rs 10677 Cr
Book Value: Rs. 69.4
Segment: Water Supply & Management
Incorporation: 1964
Headquarters: Mumbai, India
