IONEXCHANGNSEFinancial Year 2025February 3, 2025

ION Exchange (India) Limited

7,653words

144turns

12analyst exchanges

0executives

Key numbers — 40 extracted

rs,

Investor Relations of Ion Exchange (India) Limited. On behalf of the company and Valorem Advisors, I would like to thank you all for participating in the Company's Earnings Conference Call for the

INR 6905 million

he third quarter under review on a consolidated basis, the company reported operating income of INR 6905 million, an increase of around 25% year-on-year. The EBITDA reported was INR 754 million, an increase of

25%

solidated basis, the company reported operating income of INR 6905 million, an increase of around 25% year-on-year. The EBITDA reported was INR 754 million, an increase of around 7% year- on-year, w

INR 754 million

ing income of INR 6905 million, an increase of around 25% year-on-year. The EBITDA reported was INR 754 million, an increase of around 7% year- on-year, while the margin stood at 10.92% and the net profit was I

crease of around 25% year-on-year. The EBITDA reported was INR 754 million, an increase of around 7% year- on-year, while the margin stood at 10.92% and the net profit was INR 496 million, increase

10.92%

DA reported was INR 754 million, an increase of around 7% year- on-year, while the margin stood at 10.92% and the net profit was INR 496 million, increase of 5% year-on-year, while the PAT margin was a

INR 496 million

n, an increase of around 7% year- on-year, while the margin stood at 10.92% and the net profit was INR 496 million, increase of 5% year-on-year, while the PAT margin was around 7.18%. For nine months ended for th

r- on-year, while the margin stood at 10.92% and the net profit was INR 496 million, increase of 5% year-on-year, while the PAT margin was around 7.18%. For nine months ended for the financial year

7.18%

he net profit was INR 496 million, increase of 5% year-on-year, while the PAT margin was around 7.18%. For nine months ended for the financial year 2025 the company reported an operating income of IN

INR 19026 million

8%. For nine months ended for the financial year 2025 the company reported an operating income of INR 19026 million, an increase of around 22% year-on-year. The EBITDA reported was INR 2080 million, representing

22%

year 2025 the company reported an operating income of INR 19026 million, an increase of around 22% year-on-year. The EBITDA reported was INR 2080 million, representing an increase of around 16% wh

INR 2080 million

ting income of INR 19026 million, an increase of around 22% year-on-year. The EBITDA reported was INR 2080 million, representing an increase of around 16% while the EBITDA margin stood at 10.93% with a net profit

Guidance — 20 items

Vasant Naik

opening

“At the end of the Q3 of FY25 the total order book for the engineering division stood at INR 3405 crores.”

Deepak

“So, could you please highlight, in an engineering project in both domestic as well as international market, from which sector are we witnessing more order inquiries is it the core sector like steel, power, oil and gas, which are typically larger sales order, or is it the smaller ticket size from various other sector, I just wanted to understand from where are we seeing more visibility and conversions?”

Deepak

“Could you please elaborate on that, are we sacrificing the margin to fuel growth or is it that the competition intensity is becoming higher, or is it more to do with higher execution of that one onerous order which we spoke about in the last quarter, what is happening there from margin front and for the whole year, as well as Q4 what is the revenue and EBITDA guidance, margin guidance are we giving?”

Deepak

“And sir for this FY25 and let's say next year, what is our guidance in terms of engineering division sales growth and margins?”

Aankur Patni

“For FY25, Engineering should see 15% to 20% growth and in terms of margin, unfortunately because of the way things have been and as far as we can see, we will be lower than the last year.”

Deepak

“And sir coming to chemical division, so that Roha project of 400 crores could you please elaborate of that 400 crore plant, how much was spent till December?”

Vasant Naik

“Just upwards of 50% of the total project cost has been spent as of December.”

Deepak

“So, that the timeline of the commercial production in Q1 of FY26 that remains intact, right?”

Aankur Patni

“You are already aware of the overall margins from the chemical division and as we have been indicating the asset turnover that we expect on a figure of 275 crores, is roughly two and a half times.”

Vasant Naik

“No, it's not the case our contribution for the total project remains at 20% of the project cost.”

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Risks & concerns — 11 flagged

Ranadive Group Head - Financial Planning and Risk Management and Mr.

— Nupur Jainkunia

One is to do with this contract which you just mentioned about, that continues to have an impact of roughly 150 to 200 basis points and upwards on the overall engineering revenue.

— Aankur Patni

But the primary reason for the depressed margin numbers is the impact of the onerous contract.

— Aankur Patni

We have got extensions from the government, and we continue to apply to the government for further extensions because of the way that contract is getting extended, the impact of an extended stay certainly does have a play.

— Aankur Patni

Because, as I stand it, and what you have said in the call is the first half will be a drag on account of the onetime large project which are hopefully to continue, the UP is continuing to drag resources and infrastructure.

— Aejas Lakhani

Further the other onerous project will have a relatively lower percentage in the pie of the overall engineering revenue, I am not expecting this contract to continue to drag right through the next year.

— Aankur Patni

In terms of the overall company margin and the impact of Roha in terms of interest and depreciation and all of that cost, that's to be expected but we are also, as we mentioned just a while back, looking to close several discussions with large buyers so that our capacity utilization in the first year itself is reasonably good and we don't end up creating a massive negative impact of this depreciation and interest burden.

— Aankur Patni

But as we have seen in the past also, it is very difficult to predict the funding for a government project.

— Vasant Naik

So, we also being cautious as far as the execution is concerned, once the funding stabilizes, the execution will improve on this project.

— Vasant Naik

Generally, what we looked at, whenever these size of projects are there, there are packages in which there are four, five packages which are distributed in order to reduce the client specification risk also.

— Saket Kapoor

In terms of the collective impact of all of this, on the ecosystem of companies like ours, we do expect that there is going to be increased flow of opportunities from the government sector, the municipal sector, as well as from the residential and commercial sector, which would all be required to go in for more and more stringent practices.

— Aankur Patni

Q&A — 12 exchanges

So, first on engineering, so this quarter we had a good execution which led to that 34% Y-o-Y sales growth in engineering, but our new order inflow was little muted as compared to previous quarter. So, could you please highlight, in an engineering project in both domestic as well as international market, from which sector are we witnessing more order inquiries is it the core sector like steel, power, oil and gas, which are typically larger sales order, or is it the smaller ticket size from various other sector, I just wanted to understand from where are we seeing more visibility and conversion

Aankur Patni

Sure. On a global level, it is across the board, but yes, the inquiry book that we carry would be heavier on the core sectors, even in terms of order conversions it is across the board, the bigger ticket ones have not seen much of traction during the current period that's why you see that the order book per se, has not built up that much. Okay. And sir any update, for example any order inquiries we are getting for sunrise industry, like data centers or semiconductor because there is a lot of traction which is happening there? Yes, there are several under discussion on these sectors, the green

I have two questions. Could you please give us an update on the ongoing litigation about the IEEF subsidiary, and there has been some progress in the quarter. And secondly, the onerous contract when do you think that will be completed. Thank you.

Aankur Patni

Let me first answer the second one, we are expecting substantial invoicing for this contract to get completed in the first half of the FY 25 - 26. As far as the litigation is concerned, I will ask Mr. Ranadive and Mr. Puranik to fill in. The Enviro Farms matter which is a SEBI related matter. We have appealed the matter at securities appellate tribunal, and SEBI has filed a reply in the matter, and the matter is now listed for 10th February for hearing. Any other clarification you want? Do we think that there will be a resolution, or this is something that could continue for some more years be

Sir, as mentioned that you told that legacy project which is having a cost overrun will be getting completed by first half FY26, is it right?

Aankur Patni

Yes, it's going to spill into the next financial year. Okay. Can you quantify that what was the size of that project and how much that has been completed, and what margins we have made in that project? As we have been mentioning this is having a negative impact on the overall margins of the engineering division. There is still some invoicing left for this job and that's why it’s spilling into the next year in terms of impact. We have not been giving the contract name and other specifics of the contract. And would it be possible to highlight, what went wrong in this project and when it was need

Sir first question again on the UP project, given the actual outcome is going much slower than what our anticipation was, or what the earlier timeline that we were anticipating, and I believe in past, we were mentioning that we were kind of investing a lot in terms of manpower, et cetera to do this very quickly. So, just one comment on, shouldn't this be hurting our margins as well, apart from that onerous contract, and also second, this expectation that, if we get all the approvals or invoicing in line, we should be able to do this very quickly. So, how easy or hard it will be for us to kind

Aankur Patni

As I responded to the previous question also yes, the continued deployment of our resources and the revenues or the invoicing not happening at that pace is having an impact. But again, as I mentioned that our overall margins remain in-line with what we have been showing against this contract over the last few quarters. In terms of being able to ramp up with the increased fund flow, we are very much able to do that, the only unknown is when this ramp up of the funding would happen, and how we would get all the documentation and approvals at a faster pace. And this quarter maybe our order flows

Mr. Patni, I just want to understand the consumer segment. We have not spoken about this in the call. So, can you please qualify, where is this growth really coming from, is it coming from the commercial segments or the residential segments and also, while a lot of this is product sale, how much of the support revenues is built out in this 300 crore run rate which we are at today, from a revenue standpoint?

Aankur Patni

There is a good mix of commercial as well as residential in this overall revenue that you see. A significant portion is coming from the residential market, and the kind of products that we have been launching of late, they are targeted at slightly more premium residential segments which are flat owners, apartment, owners, etc. In terms of the support or service revenue as a part of the overall thing, I would ask Vasant to share with you some guidance on it. In the consumer product segment, the services portion will be in the region of around 20% to 25%. Okay. And is it fair to assume that the

Chemical segment, for resins we compete against global majors like DuPont, Ecolab, etc. we are also competing against domestic competition like Thermax, which is one of the larger manufacturers of resins in India.

Nishanth Gupta

Got it sir, thank you. Sir, for the bid pipeline of 8648 crores, what could be our conversion ratio and the execution timeline for that? Normal conversion ratio is about 15% and thereabouts. The average period of the order execution is two to three years. Got it sir. Sir, one final question, the working capital days have been inching upwards. So, what would be a moderate assumption going forward, that would be a reasonable? In terms of the working capital increase compared to a few years back. The shift has been the quantum of advance that we have been carrying from the customers. And there we

I just have one question on the working capital, I noticed that on the segmental basis engineering net asset is kind of flat, which means that on a Q-on-Q basis asset is flat, liability is kind of flat, which implies that actually probably the working capital for the segment has not come down despite the fact that we are supposed to collect some receivables for the UP project. Is this an accurate observation, if not, could you just help me understand maybe on the collection of receivables this quarter. Thank you.

Aankur Patni

I'll ask Vasant to come in on that question please, Vasant. In terms of the working capital days, what we have seen in the last two quarters, they are basically roughly at the same level what we have been seeing and specifically, coming to the engineering segment, the engineering segment has grown by almost 36% on a year-on-year basis. And that accounts for the increase in terms of the absolute number of the working capital which is deployed in the business, and specifically to the UP contact, yes there has been some delays in collection from the UP contact that was referred to in our earlier

So, just one question overall for the company if you can share or reiterate the guidance, in terms of revenue and EBITDA margins for FY25, and FY26, and this order book that you have around 3400 crores for the engineering as a whole, what's the execution period over there. Thank you.

Aankur Patni

The execution period is between roughly around two to three years. In terms of the expected growth revenues for the year, we are looking at between 15% to 20% growth. And in terms of the margins, as we spoke about, we are expecting to take a hit compared to last year on the engineering margin percentages. Overall for the company, I don't think we will be able to reach the same levels in terms of percentage as we did last year. We will be falling slightly short of it. Slightly short of the margins you mean, right? The margin percentages which we achieved last year, we will be slightly short of

Sir firstly a clarification, you mentioned that the legacy order which is damping our margin, that spillover will happen till the first quarter of the next financial year and the margin gains will be on a whole basis to the tune of 200 basis point this is what the conclusion is?

Aankur Patni

Yes, I was saying that this particular contract would spill over into the next financial year, roughly the first half of the next financial year, and the overall impact that we have seen of this on our engineering margins is to the tune of 150 to 200 basis points slightly in that region and above. And sir out of the total revenue which we have booked for the engineering segment of 417 crores if we take the standalone numbers, what would be a ballpark number which would have constituted to the execution of the projects which you are talking about? We are not giving out the specifics of the cont

Just two quick questions, number one is, what portion of our engineering revenue comes from the industrial segment, and then within industrial also, how much is ZLD. And the follow up question would be, if you could just provide a brief outlook on the same, on the industrial segment especially the ZLD, has the traction increasing, has the government's taken any step, probably which is increasing the adoption in the ZLD, I want this perspective, especially from the domestic point of view. Thank you.

Aankur Patni

Let me answer the last bit first, the effort of the government has certainly been to improve the level of effort which the industry or the government itself is making on the front of environment. ZLD is one of the technologies which government is trying to push. But there are also several other ways in which government is trying to ensure that the environmental consciousness of the industry goes up, and the implementation of that and the monitoring of that has been improving over a period of time, you should expect that in times to come, the technologies not just ZLD , but others, which are fo

I am having three questions. Let me ask my two questions first. My first question is, as we are in the fag-end of the financial year, what engineering business orders are we expecting in next 50 to 60 working days, this is a question number one. And question number two, regarding chemical business in the Q1 concall also you said we are operating 65% to 70% of the planned capacity and there is a headroom for chemical business, but consistently, we are doing 200 crores of revenue consecutive three quarters. Why chemical revenue has stuck at 200 crores because there is still room for the plant ca

Aankur Patni

The Roha revenues should start from the second quarter, we still have to go through the final process of commissioning the plant. In terms of the overall chemical segment number, I can tell you that we are looking to close the year with roughly around 10% to 15% growth. Omkar Jhaginder: Sir, growth whenever you say it's always Y-o-Y growth, I agree with you. Last time also I asked the same question, but overall that plant capacity as of now we are utilizing 65% to 70%, so is there a room to increase that capacity, or capacity utilization will be up to 70% only for the current chemical plant? N

Thank you all for participating in this earnings conference call. I hope we have been able to answer your questions satisfactorily. If you have any further questions or would like to know more about the company, please reach out to our IR Manager at Valorem Advisors. Thank you, and I wish everyone great evening.

Management

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Speaking time

Aankur Patni

Vasant Naik

Moderator

Deepak

Chetan Vora

Saket Kapoor

Mike

Aejas Lakhani

Management

Pratik Kothari

Opening remarks

Nupur Jainkunia

Good afternoon everyone and a very warm welcome to you all. My name is Nupur Jainkunia from Valorem Advisors. We represent the Investor Relations of Ion Exchange (India) Limited. On behalf of the company and Valorem Advisors, I would like to thank you all for participating in the Company's Earnings Conference Call for the Third Quarter and Nine Months Ended of Financial Year 2025. Before we begin, let me mention a short cautionary statement. Some of the statements made in today's earnings call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which would cause actual results to differ from those anticipated. Such statements are based on management's beliefs as well as assumptions made by and information currently available to management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's earnings call is purely to educate and bring

Vasant Naik

Thank you Nupur. Good afternoon, everybody. It is a pleasure to welcome you all to the earnings conference call for the third quarter and nine months ended of financial year 2025. For the third quarter under review on a consolidated basis, the company reported operating income of INR 6905 million, an increase of around 25% year-on-year. The EBITDA reported was INR 754 million, an increase of around 7% year- on-year, while the margin stood at 10.92% and the net profit was INR 496 million, increase of 5% year-on-year, while the PAT margin was around 7.18%. For nine months ended for the financial year 2025 the company reported an operating income of INR 19026 million, an increase of around 22% year-on-year. The EBITDA reported was INR 2080 million, representing an increase of around 16% while the EBITDA margin stood at 10.93% with a net profit of INR 1450 million, an increase of 18% year-on-year, while the PAT margin was around 7.62%. Now let us take you through the quarterly segmental pe

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