Ion Exchange (India) Limited: Navigating Growth and Strategic Shifts in Q2 FY26

Ion Exchange (India) Limited, a venerable name in water and environment solutions, has reported its financial performance for the second quarter and first half of the financial year 2026. The company's operations have largely normalized following the completion of its SAP system migration, setting a clearer path for future execution. For Q2 FY26, on a consolidated basis, Ion Exchange recorded an operating income of INR 733.9 crore, marking a robust 14% year-on-year increase. However, consolidated EBITDA stood at INR 68.5 crore, largely flat year-on-year, with a margin of 9.33%. Net profit for the quarter was INR 49.9 crore, a slight decline of 1.4% year-on-year, with a PAT margin of 6.80%. For the first half of FY26, the company's operating income reached INR 1317.1 crore, up 9% year-on-year, while net profit increased by 3% to INR 98.4 crore, reflecting a PAT margin of 7.47%. These figures highlight a period of strategic adjustments and foundational strengthening.

Segmental Performance: A Closer Look

The Engineering division, a core segment, reported revenue of INR 456.2 crore in Q2 FY26, an impressive 16% increase year-on-year. Despite this growth, the segment's EBIT declined by 5% to INR 22.4 crore. Management attributed this margin pressure to elevated infrastructure costs and the ongoing impact of a legacy project, which is expected to influence margins until its completion by the financial year-end. The execution of the UP Jal Nigam order remained muted due to funding issues. However, the services division demonstrated strong growth, securing several high-value, long-term O&M contracts. The company's current order book stands at INR 271.1 crore, with new orders worth INR 47 crore secured during the quarter, primarily driven by medium-sized opportunities in ultra-pure and high-purity water projects for the solar and pharmaceutical sectors.

The Chemicals segment delivered a strong performance, with revenue increasing by 11% year-on-year to INR 218.4 crore and EBIT growing by 13% to INR 59.1 crore. This segment successfully maintained its margin profile, reflecting consistent operational efficiency. A significant highlight was the stage-wise commissioning and commercialization of the greenfield resin manufacturing plant at Roha, Maharashtra, which commenced in the last week of September 2025. This INR 450 crore investment is poised to strengthen the company's manufacturing capabilities and global supply of INDION ion exchange resins.

The Consumer Products division saw substantial revenue growth of 24% year-on-year, reaching INR 85.8 crore in Q2 FY26. Despite this growth, the segment reported a loss of INR 2.7 crore, an improvement from INR 3.5 crore loss in the prior year. The company continues to focus on volume growth, maintaining its leadership in the softener segment, and expanding market share through aggressive marketing strategies and new product launches, including alkaline and hydrogen water.

Financial Summary Table (Consolidated)

Strategic Initiatives and Future Outlook

Ion Exchange is actively pursuing several strategic initiatives to drive future growth and enhance profitability. A key development is the strategic partnership with MANN+HUMMEL Water & Membrane Solutions to locally manufacture Hollow-Fiber Ultrafiltration and Membrane Bioreactor membranes in India. This technology licensing agreement, with production at the Goa facility, is expected to reduce import dependence, improve cost efficiency, and strengthen the company's competitive edge in water treatment projects. This initiative aligns with the company's broader strategy of investing in membrane technology as a significant growth area.

The commissioning of the Roha plant is a pivotal step, with management projecting it to reach 25% capacity utilization within the first 12 months and full capacity utilization over the next three to four years. This expansion is crucial for meeting the growing global demand for ion exchange resins. The company is also increasing its investment in standard system facilities to expand its range of innovative, off-the-shelf engineering products.

Management has provided guidance for the second half of FY26, expecting improved performance with engineering margins in the 6-7% range. They anticipate 9-10% year-on-year growth for the Chemical segment for the full year. The focus remains on improving the margin mix in the engineering business by prioritizing higher-margin projects, services, and technology-intensive areas like ultra-pure water and desalination. The company is also committed to disciplined capital allocation, with an estimated CAPEX of INR 80-100 crore (excluding Roha) for the year and an expected INR 40 crore in depreciation for the next year.

Conclusion: Building for Sustainable Growth

Ion Exchange (India) Limited is clearly in a phase of strategic transformation and investment. While the engineering segment faces short-term margin pressures from legacy projects and competitive pricing, the company's proactive measures—including the Roha plant commissioning, the MANN+HUMMEL partnership, and a focus on high-margin offerings—are designed to build a more resilient and profitable future. The consistent performance of the Chemicals segment and the aggressive expansion in Consumer Products further underscore the company's diversified growth strategy. Ion Exchange is positioning itself to capitalize on the increasing demand for water and environment solutions, both domestically and internationally, with a clear focus on technological leadership and operational excellence.