Summary
Ion Exchange (India) Limited - Q3 FY 2025-26 Earnings Call Summary Monday, February 2, 2026 4:00 PM
Event Participants
Executives 4 Aankur Patni (Vice-Chairman), Indraneel Dutt (Managing Director and CEO), Nikisha Solanki (Company Secretary), Vasant Naik (Group CFO)
Analysts 8 Anupam Gupta (HDFC Mutual Funds), Chetan Vora (Abakkus Asset Manager), Deepak (Sundaram AMC), Dhaval Pandya (47 Alpha Capital), Kishore Kumar (Unifi Capital), Pratik Kothari (Unique Portfolio Management Services), Raghav Maheshwari (Kamaya Care Wealth Management), Rushabh Shah (BugleRock PMS)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Operating Income (Q3) | ₹734.4 crores | +6% YoY; Impacted by deferred international dispatches and muted UP Jal Nigam execution. |
| Operating Income (9M) | ₹2,051.6 crores | +8% YoY; Cumulative growth supported by steady inquiry bank and medium-sized orders. |
| EBITDA (Q3) | ₹59.3 crores | -21% YoY; Impacted by adverse product mix, rupee depreciation, and Roha facility costs. |
| EBITDA Margin (Q3) | 8.07% | -270 bps YoY; Dragged by commissioning costs and high-margin international project shifts. |
| Net Profit (Q3) | ₹20.6 crores | -65% YoY; Significant impact from a ₹16.9 crore exceptional item for new Labour Codes. |
| Order Book | ₹2,833 crores | Robust health; Q3 inflows of ₹516 crores exceeded previous full-year intake. |
| Engineering Revenue (Q3) | ₹429.7 crores | Flattish YoY; Dragged by funding issues in UP Jal Jeevan Mission (₹400 crore backlog). |
| Chemical Revenue (Q3) | ₹230.7 crores | +16% YoY; Growth driven by volume, though EBIT fell 18% due to Roha depreciation/interest. |
Geographic & Segment Commentary
- Engineering: Performance was flattish at ₹429.7 crores revenue as international dispatches were deferred to Q4. The segment secured two domestic solar contracts totaling ₹205 crores and is focusing on high-tech ultra-pure water systems for semiconductors and data centers. Management is being highly selective to avoid low-margin legacy issues, targeting high single-digit margins.
- Chemicals: Reported revenue of ₹230.7 crores with healthy volume growth, though profitability was hit by Roha facility startup costs and ₹0.4-₹0.5 crore per unit input cost increases from rupee depreciation. The new Roha plant is a zero-liquid discharge (ZLD) facility currently at 40-45% commissioning. Management expects a 25% capacity utilization in FY 2026-27 following product certifications.
- Consumer Products: Revenue grew 28% YoY to ₹98.7 crores with continued losses (₹3.3 crores) due to aggressive brand investments (“Bharat Ka Paani”). The segment is maintaining a 30% growth trajectory, with profits being reinvested into marketing and IPL/T20 advertising to capture market share in water softeners.
Company-Specific & Strategic Commentary
- Roha Facility Commissioning: A ₹450 crore strategic investment in resin manufacturing, with ₹285 crore already capitalized. The plant follows a circular economy model (ZLD), leading to a slightly longer payback period of 4-5 years but positioning the firm for premium global export markets.
- Selective Bidding Strategy: Management has implemented a “stronger review mechanism” for EPC projects, prioritizing creditworthiness and cash flow over volume. This led to passing on specific semiconductor projects where pricing was not conducive to profitability.
- Budgetary Alignment: The company is aligned with the Union Budget’s ₹40,000 crore semiconductor outlay and the extension of the Jal Jeevan Mission to 2028. Strategic focus is shifting from generic civil work to specialized industrial clusters and green hydrogen water solutions.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Q4 Performance | Better than Q3 | Driven by scheduled invoicing of high-value international engineering contracts. |
| Roha Utilization | 25% for FY 2026-27 | Based on phased stabilization of cation streams and pending product certifications. |
| Order Execution | 2-Year Liquidation | For the remaining UP Jal Jeevan Mission backlog, assuming resumption of government fund flows. |
| Chemical Margins | Return to 9M average | Expected as rupee-driven cost increases are passed to customers in Q4 FY26 and Q1 FY27. |
Risks & Constraints
| Risk | Context |
|---|---|
| Receivables / Funding | Delayed fund allocation for the UP Jal Jeevan Mission remains an industry-wide headwind, keeping ₹400 crores of backlog muted. |
| Margin Pressure | Legacy engineering projects with adverse profitability profiles will continue to flow through the P&L into FY 2026-27. |
| Input Costs | Rupee depreciation has increased raw material costs in the Chemical segment; ability to pass these on fully is a key watch-point. |
Q&A Highlights
Semiconductor & Solar Opportunities
- Question: What is the status of semiconductor orders and the overall market size? (Rushabh Shah)
- Answer: Two projects were recently awarded in the industry but Ion Exchange did not participate due to non-conducive pricing. The company remains active in bidding for ultra-pure water and ZLD solutions for semiconductors, data centers, and green hydrogen, having already secured ₹205 crores in solar sector wins (Indraneel Dutt).
Roha Plant Economics
- Question: What is the capacity and utilization of the new Roha facility? (Raghav Maheshwari)
- Answer: Total CAPEX is ₹450 crores with ₹130 crores still in CWIP. One major product line (cation) is stabilized; 25% utilization is targeted for FY27 as international approvals/certifications take 1-2 quarters per product (Vasant Naik/Indraneel Dutt).
Legacy Project Timelines
- Question: When will the low-margin legacy projects finish impacting the P&L? (Saket Kapoor)
- Answer: Most supplies for the large legacy project are complete, but construction/commissioning will flow into next year. Management expects these to “taper off” in FY27, though UP projects will take 2 years to move into the O&M phase (Indraneel Dutt).
Key Takeaway
Ion Exchange (India) Limited reported a transitionary quarter in Q3 FY26, with revenue growth of 6% YoY to ₹734.4 crores tempered by a 21% decline in EBITDA. The performance was pressured by the deferral of high-margin international engineering dispatches to Q4, funding delays in the UP Jal Jeevan Mission, and the initial overhead impact of the new ₹450 crore Roha chemical facility. Strategically, the company is pivoting toward high-tech water solutions for the semiconductor and solar sectors, evidenced by ₹205 crores in recent solar wins and a robust total order book of ₹2,833 crores. While legacy EPC projects continue to weigh on engineering margins, the stabilization of the Roha plant and a target of 25% utilization in FY27 suggest long-term margin expansion in the chemical segment. Management remains cautious on the short-term margin profile until legacy orders taper off but maintains a positive outlook for Q4 and beyond based on healthy inquiry banks and budgetary tailwinds in infrastructure.
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