Stock Split Alert: Multibagger Smallcap Water Treatment Firm Announces 1:10 Stock Split

Engineering and industrial equipment manufacturing firms delivered a strong performance in the December 2022 quarter due to the government's investments towards domestic growth.

In the midcap and smallcap space, fundamentally strong companies witnessed their profits and revenues more than double on a year on year (YoY) basis. The operational performance was another noteworthy highlight of the quarter.

Consequently, shareholders in the sector have been handsomely rewarded in recent months, not only in terms of profits but also, through periodic dividends, bonuses, and stock splits.

One such company that has recently announced a stock split is Ion Exchange.

Here's all you need to know.

• Ion Exchange announced bonus shares on 20 April 2023.
• The company will issue bonus shares in a ratio of 1:10. This means a sub-division of one equity share of the company having a face value of Rs 10 each into ten equity shares having a face value of Re 1 each.
• The board has cleared the stock split to enhance the liquidity in the capital market, widen the shareholder base and make the shares more affordable for small investors.
• The record date for the sub-division of equity shares will be decided by the board and intimated to the stock exchanges.

Issuing more shares to current shareholders through a stock split increases the number of outstanding shares. While the market price per share decreases, the overall market capitalization of the company remains unchanged.

Interestingly, this is the first time the company has come out with a stock split.

Post the stock split, the number of shares outstanding will increase to 1.7 billion (bn), which currently stand at 170 million (m).

The anticipated completion time is three months from the date of approval by the shareholders.

A look at the company's financials

For the December 2022 quarter, the company's revenue rose 31.9% YoY to Rs 5.1 bn from Rs 3.9 bn in the same quarter last year.

Net profit came in at Rs 480 m, up 69.1% YoY from Rs 284 m in the December 2021 quarter.

This was on the back of continuous order wins and a decrease in the price of the input cost of the company.

For the first nine months (April 2023 to December 2023) of the financial year 2022-23, the company reported a 27.5% YoY jump in revenue to Rs 13.4 bn, against Rs 10.8 bn a year back.

Net profit during the same period rose by 41.1% YoY to Rs 1.1 bn. This growth in earnings was due to higher sales and decreasing finance costs to the company.

Over the last five years, Ion Exchange's revenue has grown at a CAGR of 8.7%, while net profit has grown at a CAGR of 32.2%.

An increase in demand and higher realisations aided the earnings.

Ion Exchange Financial Snapshot - 5 years

Particulars	Mar-18	Mar-19	Mar-20	Mar-21	Mar-22
Total revenues (Rs in m)	10,579.0	11,956.0	15,152.0	14,826.0	16,194.0
Growth (%)	-	13.0	26.7	-2.1	9.2
Operating profit (Rs in m)	801.0	1,089.0	1,379.0	2,044.0	2,151.0
Operating profit margin (%)	7.7	9.4	9.3	14.1	13.6
Net Profit (Rs in m)	400.0	653.0	937.0	1,434.0	1,613.0
Net profit margin (%)	3.9	5.6	6.3	9.9	10.2

Source: Equitymaster

To maintain its growth trajectory, the company will continue to expand in reach.

As of March 2022, the company has zero debt on its books.

Further, the company is set to benefit from fueled by the government's central budgetary assistance for infrastructure development and private spending.

The Finance Ministry is looking forward to increasing the infrastructure spending by 33% to Rs 10 trillion (tn) in the financial year 2024. This will boost the revenue growth of the sector.

With healthy order books and recovery in profitability, debt metrics will also improve next fiscal as higher order inflows will boost its revenues.

How shares of Ion Exchange have performed recently

The share price of Ion Exchange has dropped by 2% in the past one month.

Over the past one year, shares of the company have rallied 88%. In the past three years, shares have delivered multibagger returns.

The company touched its 52-week high of Rs 3,549 on 5 April 2023 and its 52-week low of Rs 1,590 on 11 May 2022.

ION Exchange is currently trading at a PE (Price to Earnings) multiple of 19.9x.

About Ion Exchange

Ion Exchange (India) Ltd, a leader in Indian water treatment Industry offers total water management solutions for industry, homes, and communities.

It is one of the very few companies in the world with a range of technologies, products, and services that cover the entire spectrum of water and waste-water treatment.

Ion Exchange has three decades of experience in the manufacture of ion exchange resins and in the design and supply of treatment plants for water, process liquid and wastewater.

Further it also entered public health sector, urban and rural, for infrastructural and community level drinking water treatment.

The company has licensing agreements with some of the best-known specialist water treatment companies in the US and Western Europe.

The company provides comprehensive consultancy services including water management surveys and detailed project reports, apart from a range of technical services.

To know more about the company checkout Ion Exchange company fact sheet and quarterly results on our website.

You can also compare Ion Exchange with its peers:

Ion Exchange vs Bajaj Steel

Ion Exchange vs Bharat Electronics

For the companies with long history of issuing bonus, check out 5 Indian companies which have consistently declared bonus shares.

Also if u are looking for rewarding stocks in this bear market, check out our editorial, 5 stocks to watch out for bonus shares and stock split in May 2023.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...