Ion Exchange posts second-quarter loss as expenses rise 14.1%

Ion Exchange reported a consolidated Rs 82.8 crore loss after tax in the second quarter of financial year 2027 (Q2-FY27), as operating expenses rose 14.1% to Rs 759.5 crore and operating income fell 8.1% to Rs 674.7 crore, reversing a Rs 49.9 crore profit a year earlier.

Why did Ion Exchange report a second-quarter FY27 loss?

Ion Exchange attributed the material financial impact in Q2-FY27 to a change in the estimated cost to complete a few legacy projects in its Treatment Solutions segment. Consolidated operating earnings before interest, tax, depreciation and amortisation, or EBITDA, moved from a Rs 68.5 crore profit in Q2-FY26 to a Rs 84.8 crore loss in Q2-FY27.

Treatment Solutions turnover was also affected by the scheduling of execution on certain high-value contracts for the second half of FY27. Ion Exchange said dispatches to Gulf Cooperation Council (GCC) markets were delayed by the ongoing Middle East crisis, reducing turnover in the segment during Q2-FY27 while revised project-cost estimates increased the expense burden.

The loss extended below the operating line in Q2-FY27. Depreciation increased 80.3% year on year to Rs 22 crore, finance cost rose from Rs 3.1 crore to Rs 9.4 crore, and other income fell 45.5% to Rs 7.8 crore, resulting in a Rs 108.4 crore loss before tax versus a Rs 67.5 crore profit a year earlier.

How did Ion Exchange's quarterly income and margins change?

Ion Exchange's consolidated expenses increased faster than income moved in Q2-FY27, reaching Rs 759.5 crore from Rs 665.4 crore in Q2-FY26 while operating income declined from Rs 733.9 crore. Operating EBITDA margin consequently changed by 21.90 percentage points, to negative 12.57% from 9.33%, while the profit-after-tax margin moved to negative 12.27% from 6.80%.

The sequential comparison shows that the Q2-FY27 loss followed a Rs 3.1 crore profit after tax in Q1-FY27. Operating income fell 3.7% quarter on quarter from Rs 700.5 crore, whereas expenses rose 13.6% from Rs 668.7 crore, taking EBITDA from a Rs 31.8 crore profit and a 4.54% margin to a Rs 84.8 crore loss and a negative 12.57% margin.

Diluted earnings per share changed to a loss of Rs 6.837 in Q2-FY27 from earnings of Rs 4.178 in Q2-FY26 and Rs 0.347 in Q1-FY27. Total comprehensive income was a Rs 82 crore loss, compared with Rs 52.6 crore income a year earlier, and Ion Exchange reported no exceptional items in the consolidated quarterly statement.

Which Ion Exchange segments and operations affected the quarter?

Ion Exchange said Industrial Products grew approximately 35% year on year in Q2-FY27, while Lifecycle Services delivered sequential growth with stable margins. Specialty Chemicals recorded sequential and year-on-year turnover improvement, and Consumer Products continued to register volume growth, but these developments did not offset the Treatment Solutions project-cost reassessment.

Specialty Chemicals margins remained under pressure from input-cost inflation connected with the West Asia crisis and costs associated with the Roha facility. Ion Exchange said improved cost pass-through to customers is expected to support margin recovery in coming months, while offtake from the new resin manufacturing facility at Roha is gradually improving.

Consumer Products demonstrates the difference between revenue growth and current segment profitability. Consolidated Consumer Products revenue rose to Rs 100.5 crore in Q2-FY27 from Rs 77.1 crore in Q2-FY26, but earnings before interest and tax loss widened to Rs 4.1 crore from Rs 2.3 crore; first-half revenue increased to Rs 212.9 crore from Rs 161.3 crore as the loss widened to Rs 4.5 crore from Rs 2.7 crore.

Ion Exchange also said its Advanced Digital solutions offering is receiving an encouraging response and is expected to affect its financial profile in the future. The company has additionally invested in strengthening its organisation structure in overseas geographies to expand market reach, although the presentation does not quantify either initiative's Q2-FY27 revenue contribution or investment.

What does Ion Exchange's first-half FY27 performance show?

Ion Exchange's first-half FY27 consolidated operating income increased 4.4% year on year to Rs 1,375.2 crore, but expenses rose 20.4% to Rs 1,428.2 crore. The result was a Rs 53 crore operating EBITDA loss, compared with Rs 131 crore of EBITDA in the first half of FY26, and the operating margin changed to negative 3.85% from 9.95%.

The first-half consolidated loss after tax was Rs 79.7 crore, against a Rs 98.4 crore profit in H1-FY26, and diluted earnings per share were negative Rs 6.490 versus Rs 8.286. Depreciation increased 79.5% to Rs 43.8 crore, finance cost rose from Rs 5.6 crore to Rs 18.4 crore, and other income declined 56.9% to Rs 13.8 crore.

Standalone results showed a similar direction in the first half of FY27, with operating income rising 4.6% to Rs 1,251.3 crore while EBITDA became a Rs 46.7 crore loss from a Rs 117 crore profit. Standalone profit after tax was a Rs 60 crore loss versus a Rs 94.8 crore profit, while consolidated income was Rs 123.9 crore higher than standalone income and the consolidated loss was Rs 19.7 crore larger.

Conclusion

Ion Exchange's Q2-FY27 result shows that higher expenses outweighed a smaller decline in operating income, with the Treatment Solutions legacy-project cost reassessment central to the company's explanation. The quarter changed consolidated EBITDA from a Rs 68.5 crore profit to a Rs 84.8 crore loss, while the first half showed that a 4.4% increase in income did not offset a 20.4% increase in expenses.

The next disclosed milestone is the second-half FY27 execution of high-value Treatment Solutions contracts, supported by Ion Exchange's stated strong order backlog and planned schedules. Management expects that execution to improve turnover and margin profile, while Industrial Products order inflows, Specialty Chemicals cost pass-through and increasing Roha-facility offtake are the other disclosed factors to watch.