Ion Exchange: Navigating Challenges, Eyeing Future Growth

Ashwin Thakker

— 2 min read
  • Roha plant commissioning targeted for Q2 FY26.
  • Expected Roha plant full capacity ramp-up in 3-4 years, largely export-focused.
  • Chemical segment anticipated to return to usual business terms in Q2 FY26 following SAP transition impact.
  • Engineering division's legacy projects and UP Jal Nigam order execution delays expected to continue through FY26, impacting segment profitability.
  • Consumer product segment aims to sustain strong growth, with long-term profitability improvements expected.

Ion Exchange (India) Limited's Q1 FY26 saw modest revenue growth, with net profit up 8%. Operational challenges from SAP migration and project delays marked the quarter. Management outlines a clear recovery path and future expansion, notably with the upcoming Roha plant commissioning. This strategic move aims to improve profitability and drive sustained growth across its diverse business segments.

Strategic Growth Drivers & Operational Recovery

The company's chemical division is poised for a significant boost with the Roha greenfield manufacturing plant set for commissioning in Q2 FY26. Management anticipates a gradual ramp-up to full capacity over the next three to four years, primarily targeting export markets in North America, Europe, Asia-Pacific, and the Middle East. This expansion is critical, especially after the chemical business experienced a 'single digit percentage impact' on sales in Q1 due to SAP transition. The company expects the chemical platform to 'be back on usual terms of business for this 2nd Quarter.'

Furthermore, the consumer product division exhibited robust performance, recording a nearly 36% year-on-year revenue increase. The management stated,

For this particular year we will try to hold on to this performance levels, but over the longer term, we expect that the performance of this segment will improve.

This growth is supported by deeper market penetration and increased product acceptance, along with ongoing investments in new production technology to maintain and expand market share in a highly competitive landscape.

Engineering Segment Outlook & Margin Strategy

The engineering division, despite a 2% year-on-year revenue reduction, saw its EBIT surge by 48% in Q1 FY26, primarily due to a 'one-time extra cost rebate' from a large EPC contract. However, management clarified that without this non-recurring benefit, margins would have been 'lower than FY 24-25 engineering segment margin.' Legacy projects, including the UP Jal Nigam order, continue to face execution challenges due to fund availability and are expected to persist through the end of FY26.

Regarding new orders, the company noted 'delays in the finalization of certain large value opportunities,' resulting in no significant order wins this quarter. Management reiterated its strategy to 'pursue selectively opportunities' in both domestic and international markets, focusing on projects with profitable execution, particularly in high-growth areas like solar, semiconductor, and pharma segments. The impact of new tariffs on US exports is currently under review, with the company confident in retaining its customer base and gaining market share.

Ion Exchange is navigating a transitional period with strategic initiatives. The upcoming Roha plant commissioning and recovery from SAP challenges are poised to drive future growth. While the engineering segment faces ongoing project execution hurdles, the company's selective bidding and focus on profitable opportunities underscore a cautious yet optimistic outlook for the coming quarters, aiming for sustained profitability and market leadership.

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