ION Exchange (India) Q1 FY27 earnings call

ION Exchange (India) Limited reported a consolidated revenue of INR 701 crores for Q1 FY27, marking a 20% year-on-year increase. Despite this top-line growth, profitability was significantly impacted, with EBITDA declining by 49% year-on-year to INR 32 crores, resulting in an EBITDA margin of 4.54%. Net profit stood at INR 3 crores, with a PAT margin of 0.44%. Management attributed the profitability pressures to ongoing legacy projects, geopolitical factors, and costs associated with new facilities.

The company has reclassified its engineering segment into three distinct sub-segments: Treatment Solutions, Industrial Products, and Lifecycle Services. This change, alongside existing Specialty Chemicals and Consumer Products, aims to provide greater transparency and better reflect the company's evolution towards advanced treatment solutions, products, and services. Management emphasized that this reclassification highlights significant investments and growth in product and service portfolios, which were previously less visible within the broader engineering segment, and there is no immediate corporate action planned beyond enhanced reporting.

The Industrial Products segment demonstrated strong performance, with revenue growing 14% year-on-year to INR 105 crores and EBIT margin significantly improving to 11.89% from less than 6%. Lifecycle Services also saw robust growth, with revenue up 28% year-on-year to INR 72 crores and EBIT increasing 22% to INR 7 crores. However, the Treatment Solutions segment reported an EBIT loss of INR 17 crores, primarily due to legacy projects. Specialty Chemicals revenue increased 21% to INR 230 crores, but EBIT declined 52% to INR 22 crores, impacted by geopolitical factors and costs related to the Roha facility. Consumer Products grew 33% to INR 112 crores but recorded a loss of INR 34 lakhs.

ION Exchange is actively expanding its manufacturing capabilities across several key areas. The Roha plant is expected to increase total resin capacity by 5x, including de-bottlenecking at Ankleshwar, and is currently stabilizing. The Ankleshwar pharma resin facility is undergoing a 6x capacity expansion, targeting high-margin specialty applications, with completion expected within 12 months. Additionally, the Goa facility is expanding its membrane manufacturing capabilities, aiming for 3x business growth over the years, including new UF and MBR products, and standard plant capacities have been expanded across Hosur, Goa, and Wada.

As of June 2026, the company's order book stood at INR 2,473 crores, providing healthy execution visibility. This figure excludes a recently secured $52 million (approx. INR 430 crores) contract from Hyundai, announced post-quarter. The bid pipeline remains robust at INR 9,777 crores, indicating strong future order inflow opportunities. Management highlighted a strategic focus on securing more profitable contracts and expanding into international markets, leveraging new capabilities and global presence.

The company continues to grapple with the impact of certain large legacy projects, particularly the UP project, which contributed to the EBIT loss in the Treatment Solutions segment. Management clarified that the UP project's full resolution will extend beyond the current financial year, with approximately 11% of the order backlog still unexecuted. Geopolitical situations have also made Roha plant utilization 'softer than expected' and impacted invoicing, contributing to the decline in Specialty Chemicals EBIT. The company is actively working to mitigate these impacts by being more selective in new project pursuits and focusing on advanced solutions.

ION Exchange is strategically pivoting towards high-tech, advanced, and emerging solutions in water and wastewater treatment. This includes areas like resource recovery, lithium extraction, green hydrogen applications, ultrapure water for semiconductors, and solutions for 'forever chemicals' (PFAS). The company aims to leverage its R&D and partnerships to offer specialized solutions that command higher margins and address unmet market needs globally, thereby improving its overall profitability mix over time^⏳. This shift is expected to drive future growth and enhance the company's competitive positioning.