ION Exchange extends rally; zooms 127% so far in 2023 on strong outlook

Shares of ION Exchange hit a record high of Rs 622.80, as they rallied 6 per cent on the BSE in Tuesday’s intra-day trade. In past two trading sessions, the stock of civil construction company has surged 18 per cent on strong business outlook. It surpassed its previous high of Rs 609.20 touched on July 25, 2023.

In past four months, the stock price of ION Exchange has appreciated by 53 per cent after it turned ex-date for sub-division / stock split in the ratio of  10:1 i.e. 1 equity share of face value of Rs 10 each sub-divided into 10 equity shares of face value of Re 1 each.

Meanwhile, thus far in the calendar year 2023, the stock price of the company has more-than-doubled or zoomed 127 per cent, as compared to 8.7 per cent rise in the S&P BSE Sensex.

ION Exchange offers a wide range of solutions across the water cycle from pre- treatment to process water treatment, waste water treatment, recycle, zero liquid discharge, sewage treatment, packaged drinking water, sea water desalination etc.

The group is also engaged in manufacturing resins, speciality chemicals for water and waste water treatment as well as non-water applications. The group’s water and environment management solutions extend beyond the industrial sector to homes, hotels, spas, educational institutions, hospitals, laboratories, realty sector, defense establishments and rural communities, providing safe drinking water and a clean environment.

CRISIL Ratings believes ION Exchange will continue to benefit from its established market position, healthy order pipeline in the engineering division, strong profitability in the chemicals division and an improved business risk profile.

ION Exchange to sustain the consolidated topline growth in fiscal 2024 in line with as witnessed in the previous fiscal, on the back of strong order book for Engineering segment of ~Rs 3,351 crore as on June 30, 2023 duly supported by new acquisition and strong demand from end-users spread across the industries, according to the rating agency.

Consequently, ION Exchange is likely to generate net cash accruals of above Rs 250 crore in the same period. Operating margin is expected to be range bound at 13-14 per cent in fiscal 2024, primarily driven by the healthy operating profitability of above 20%in the chemicals division. In fiscal 2023, consolidated revenue grew by ~26 per cent with sustained operating margin of ~13 per cent, leading to increase in the net cash accruals to ~Rs 224 crore.

The company’s recent acquisition of a Portugal based company MAPRIL (acquisition completed in Q1FY2024 at a total consideration of ~Rs 24 crore, funded from internal accruals), will provide better access to the European market and increase the product offerings in chemical division, the rating agency said in rationale.