Detailed Narrative
Q2 FY26 Consolidated Performance Overview
Ion Exchange reported a Q2 FY26 operating income of INR 7,339 million, marking a 14% year-on-year increase. For the first half of FY26, operating income grew 9% YoY to INR 13,171 million. EBITDA for Q2 stood at INR 685 million, largely flat YoY, resulting in a 9.33% margin, while net profit slightly declined by 1.4% YoY to INR 499 million, with a PAT margin of 6.8%.
Engineering Segment Challenges and Outlook
The engineering division's revenue increased by 16% YoY to INR 4,562 million in Q2 FY26, but segment EBIT declined by 5% YoY to INR 224 million, leading to a low margin of 4.91%. This was attributed to elevated infrastructure costs, legacy projects, and muted execution of the UP Jal Nigam order due to funding issues. Management expects H2 FY26 engineering margins to improve to 6-7% as new, higher-margin orders are executed.
Chemical Segment Strong Growth and Roha Plant Commissioning
The chemical segment delivered strong performance, with Q2 FY26 revenue growing 11% YoY to INR 2,184 million and EBIT increasing 13% YoY to INR 591 million, achieving a robust margin of 27.06%. The company commenced stage-wise commissioning of its greenfield manufacturing plant at Roha, Maharashtra, in September 2025, aiming for 25% capacity utilization in the first 12 months and full capitalization by the end of FY26.
Consumer Product Division Expansion
The consumer product division recorded healthy growth, with Q2 FY26 revenue increasing 24% YoY to INR 858 million. The segment reduced its loss to INR 27 million from INR 35 million in the prior year, driven by market share expansion, brand promotions, and geographical reach into neighboring markets like Nepal. The company continues to reinvest profits to fuel further growth in this segment.
Strategic Partnership with MANN+HUMMEL
Ion Exchange entered a strategic technology licensing partnership with MANN+HUMMEL Water & Membrane Solutions to locally manufacture hollow-fibre ultrafiltration and membrane bioreactor membranes in India. This co-branding arrangement under the HYDRAMEM brand will leverage MANN+HUMMEL's technology to enhance cost efficiency, reduce import dependence, and expand offerings in wastewater and biopharma applications, with manufacturing at the Goa facility.
Capital Expenditure and Debt Profile
Total CAPEX for the Roha plant is approximately INR 450 crores. In H1 FY26, the company spent INR 160 crores on CAPEX, with roughly INR 120 crores allocated to the Roha plant. Gross debt increased from INR 300 crores to INR 400 crores by September 2025, with an anticipated additional INR 50 crores by FY26 end. Depreciation is expected to be around INR 40 crores annually next year due to Roha capitalization.
Order Book and Pipeline
The current order book stands at INR 27,110 million, with an order inflow of INR 4,700 million during Q2 FY26. The bid pipeline is robust at INR 9,011 crores, with a win ratio of 15-20%. The company is selectively pursuing opportunities in ultra-pure water, high-purity water, desalination, and emerging sectors like electronics and solar, aiming for a better margin mix.