Ion Exchange Maps Future Growth New Plant and Profit Path

Key Facts on Outlook:

• Sales Outlook:
• Roha greenfield plant commissioning in Q2 FY'26, shipping by end of Q2, targeting phased full capacity in 3-4 years, primarily for export markets.
• Engineering division's Q1 SAP impact on sales is recoverable in Q2/Q3; large order wins delayed, but substantial bid pipeline (INR 92,000M+) remains.
• Chemical division sales to return to “usual business terms” from Q2 after Q1 SAP impact.
• Consumer products division targets maintaining strong Q1 growth for FY'26, with long-term improvement from market penetration and new products.
• Margin Outlook:
• Engineering EBIT margin for FY'26 not expected to significantly improve over FY24-25 levels due to one-time Q1 gain, legacy projects, and elevated infrastructure costs.
• Chemical division margins returned to average profitability levels, with ongoing cost monitoring.
• Consumer products division reduced losses in Q1; long-term margin improvement expected, requiring continued investment in competitive market.

Ion Exchange (India) Limited outlines a clear vision for its future, anchored by strategic capacity expansion and a keen focus on operational efficiency. Despite Q1 FY26 challenges, the company is poised for growth, leveraging new facilities and market strategies. This analysis delves into their guidance on sales and margins across key business segments.

Strategic Capacity and Sales Outlook

Ion Exchange’s new Roha plant is crucial for future sales, set for commissioning in Q2 FY26 and shipping by quarter-end. It targets full capacity in 3-4 years, primarily boosting chemical exports. This expansion provides significant headroom. Post-Q1 SAP disruptions, the chemical segment anticipates a return to “usual terms of business” from Q2. Engineering sales outlook notes delayed large order finalizations, but a robust bid pipeline exceeding INR 92,000 million points to future potential. Legacy projects will continue to impact execution through FY26.

Profitability and Market Dynamics

Ion Exchange’s margin outlook varies. Q1 engineering EBIT margin benefited from a one-time rebate, not sustainable; full-year engineering profitability is not expected to significantly improve due to legacy projects and elevated costs. Selective bidding continues amidst intense competition. Conversely, the consumer products division reduced Q1 losses, driven by strong growth from market penetration and new products. The company anticipates long-term margin improvement for this segment, stressing continuous investment for competitiveness in its dynamic market.

Ion Exchange is strategically investing in capacity with the new Roha plant, aiming to boost exports and recover from Q1 operational setbacks. While engineering margins face near-term pressure from legacy issues and costs, consumer products show promising growth and reduced losses. The company's focus on selective, profitable projects and continuous innovation positions it for sustained long-term growth across its diverse portfolio.