Why Investors Should Take Advantage Of Short-Term Pain In The ION Exchange? : I exchanged one of the leading players in the water treatment and pollution as well as waste management has actually seen its business getting impacted because of the covert 19th pandemic particularly in the light of its exposure to industrial clients and segments now in our ideas for profit.
Today Moneypip will discuss so whether investors should really keep this talk on radar for the long term and should take advantage of the short term pain. Let’s look at the earnings first now first of all enduring up during the q4 or the March quarter the company reported close to 19 percent drop in the consolidated revenue this time also it’s engineering division which actually forms close to 60% sixty percent of the total revenues so a steep 25 percent your on your dip in the revenues to about two hundred and twenty crore rupees.
Now engineering business is largely an industrial turnkey project based business which is actually suffered during the lock-down as customers default projects and dispatches also suffered particularly revenue recognition of its Srilanka project suffered in the light of Kovac 19 relatively the company’s other segments say chemicals did quite well also revenue dropped marginally by 8 percent on a year on your business for this segment.
However the segment margins were higher because of the increased capacity now this really helped in protecting the profitability front as well chemicals form nearly 30% of the revenue but its contribution to the profitability was quite high and the company was really able to absorb the losses from the consumer business. There of consumer business reported an abit loss of twenty eight crore rupees in q4 now the company has indicated that all of its facilities are now operational and gradually the dispatches are also normalizing with the ease of lock-down and this is good particularly for the engineering division which actually accounts for the bulk of the revenue.
Now post permission from the government the company has also resumed the supply and has also started to work on its Srilanka project also now now this is reflected in its March quarter results where the revenue and the profitability really dropped marginally and order inflows were muted as well still the impact of our loss of revenue in the first quarter of the current Scalia will be visible and recovery will mostly be expected in the second half of the financial year.
Now the company has been making efforts to bring down the working capital also however this could again increase in the light of the stress in the industry right now thankfully the company is sitting on a cash and cash equivalent of about four hundred crore rupees which is good enough to support liquidity in this period now it is expected that our losses in the consumer business would recover as volumes pick up post the lock down chemicals will continue to have higher margins and profitability led by higher capacity and this favorable revenue milks should actually help in maintaining the overall profitability of the company even if pressure is seen in the engineering as well as in the consumer business.
Therefore on an overall basis we are expecting that this year’s revenue and margins could drop marginally both growth and margins should be better in the next fiscal year we are definitely expecting good recovery in the earnings led by margin expansion in f5 22 now the stock has corrected in the recent past from the 52-week high level of say 1:07 1 to the current levels of about 695 rupees per share moreover the valuations have turned quite attractive at least at the current levels it is trading at 6 times deep fi 22 estimated earnings which is really attractive in the light of growth and the quality of earnings also supported by the strong balance sheet investors can therefore look at accumulating this store for the long term.
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