GuruFocus - Release Date: November 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ion Exchange (India) Ltd (BOM:500214) reported a 21% year-on-year increase in operating income for Q2 2025, reaching INR 6,445 million.
- The company's EBITA increased by 13% year-on-year, with a margin of 10.5%.
- Net profit rose by 19% year-on-year to INR 506 million, with a profit margin of 7.85%.
- The engineering division saw a 26% year-on-year revenue increase, driven by improved execution of large EPC contracts.
- The chemical division reported a 12% year-on-year revenue increase, with a 23% rise in EBITA, indicating strong performance and margin improvement.
- The consumer product division continues to experience losses, with a loss of INR 35 million for the quarter.
- Capacity utilization in the chemical segment is between 65-70%, indicating underutilization of existing capacity.
- The company faces challenges in the execution of certain contracts, impacting overall margins.
- There is uncertainty regarding the allocation of funds for projects in Sri Lanka, affecting the completion of contracts.
- The company's overall operating profit margin remains at 11%, with no significant improvement expected due to ongoing contract challenges.
A: We have been preparing for the launch of the new plant by establishing long-term contracts with key customers and building relationships with distribution channels globally. We are confident that within 3 to 4 years, we will achieve full capacity utilization. (Respondent: Unidentified_5)
Q: What is the current capacity utilization in the chemical segment, and why isn't it fully utilized?
A: Our current capacity utilization is between 65-70%. The capacity is based on a specific product mix, and we are optimizing for both top-line and bottom-line growth. We expect a 5-10% increase in utilization with changes in the product mix. (Respondent: Unidentified_5)
Q: How is the engineering segment performing, and what are the expectations for the future?
A: The engineering segment has seen a ramp-up, and we expect revenue growth to continue. We anticipate a 15-20% growth in the current year, driven by improved execution of contracts and a strong order book. (Respondent: Unidentified_5)
Q: Can you comment on the insider selling of shares by key individuals?
A: The sale of shares by the individuals mentioned is a personal decision. They have been long-term investors and are selling a small portion of their holdings, likely to monetize their investments. (Respondent: Unidentified_5)
Q: What is the status of the Sri Lanka contract and the associated receivables?
A: The Sri Lanka contract is progressing slowly, with further execution dependent on fund allocation. There is still some outstanding amount, but we are confident about recovering it once funds are allocated. (Respondent: Unidentified_5)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.