ION EXCHANGE (INDIA) LTD - Quantamental Equity Research

Quantamental Equity Research on ION EXCHANGE (INDIA) LTD | Release: 19 Feb 2019 16:37:38 UTC+05:30 | Reporting Currency: INR | Trading Currency: INR | Exchange:NSE/BSE NSE CODE:Not Listed and BSE CODE:500214
Last Close:  INR 372.75
Fair Value:  INR 352.4
Est. Price by Mar 19:  INR 557.65
Market Capitalization (INR Crs):  546.70
Industry:  Industrial Machinery
Rating:  STRONG BUY
Upside:  50%
Company Profile
Ion Exchange (India) Limited is engaged in water and environment management business. The Company offers products, including ion exchange resins, water treatment plants and chemical additives.
Growth Per Share
Particulars 1-Year 3-Year 5-Year  
Revenue % 6% 77% 93%  
EBIT % 6% 81% 98%  
Earnings % 2% 83% 122%  
Book Value %  14% 56% 88%  
Stock Total Return %  24% 92% 411%  
Share holding pattern
Particulars %age   
(A) Promoter & Promoter Group 44.04  
(B) FII/FPI 0.17  
(C) DII/Insurance Companies 6.40  
(D) Public holding < 2 lakhs of cap. 25.12  
(E) Others 24.27  
Grand Total 100.00  
Fundamentals (Historical and Estimated)
Particulars Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18  Mar-19 E   Mar-20 E   Mar-21 E   Mar-22 E   Mar-23 E   
Price 158 141 114 98 99 260 324 401 499 558 635 721 778 825  
Return on Equity 5% 8% 11% 12% 10% 12% 14% 16% 14% 15% 15% 14% 14% 13%  
Price to Earning  151.9 74.9 41.8 29.2 31.4 65.1 61.5 12.5 15.3 14.1 14.1 14.1 14.1 14.1  
EVTI 2.0 1.6 1.1 0.8 0.9 2.3 2.6 0.7 0.8 0.8 0.8 0.9 0.8 0.8  
EVTIFM 151.9 74.9 41.8 29.2 31.4 65.1 61.5 12.5 15.3 14.1 14.1 14.1 14.1 14.1  
Price to Book Value 7.7 6.2 4.5 3.4 3.2 7.7 8.5 2.0 2.1 2.1 2.1 2.0 1.9 1.8  
Debt to Equity  0.4 0.3 0.3 0.3 0.4 0.2 0.2 0.3 0.4 0.2 0.0 0.0 0.0 0.0  
Dividend Yield 0% 0% 0% 0% 0% 0% 0% 1% 1% 1% 1% 1% 1% 1%  
Cash Flow to Firm 29% 15% 14% 21% 10% 16% 5% 2% 0% 13% 12% 11% 11% 11%  
Detailed Estimates
Title Mar-18 Mar-19 E Mar-20 E Mar-21 E Mar-22 E Mar-23 E  
Sales          985.93       1,009.76       1,040.69       1,079.29       1,126.29       1,182.60  
EBITDA          102.98          118.40          122.03          126.55          132.07          138.67  
EBIT            91.05          106.18          110.86          116.34          122.73          130.13  
PBT            72.83            87.96          100.17          113.67          122.73          130.13  
NPAT            47.74            58.05            66.11            75.02            80.99            85.88  
Price to Earning             15.32            14.09            14.09            14.09            14.09            14.09  
Price to Book Value              2.13              2.07              2.05              2.03              1.93              1.81  
Debt to Equity               0.40              0.21              0.04                 -                   -                   -    
Return on Equity              0.14              0.15              0.15              0.14              0.14              0.13  
Enterprise Value to Total Income (EVTI)              0.80              0.81              0.83              0.85              0.83              0.79  
Enterprise Value to Total Income to Firm Margin(EVTIFM)            27.36            23.98            24.40            24.80            23.90            22.54  
Price or Est. Share Prices          498.53          557.65          635.05          720.65          778.10          825.05  
DISCOUNTED CASH FLOW
Title Mar-19 E Mar-20 E Mar-21 E Mar-22 E Mar-23 E  
PBT            87.96          100.17          113.67          122.73          130.13  
Interest            18.22            10.69              2.67                 -                   -    
Depreciation            12.22            11.17            10.21              9.34              8.54  
Cash Flow Before Tax          118.40          122.03          126.55          132.07          138.67  
Tax Rate            33.99            33.99            33.99            33.99            33.99  
Cash Flow After Tax            78.16            80.55            83.54            87.18            91.54  
Terminal Cash Flow                                                                                    -            594.96  
Total Cash Flow            78.16            80.55            83.54            87.18          686.50  
Present Value of Cash Flow          516.82  
Debt                 -    
Value of Equity          516.82  
Fair Value Per Share          352.40  
Equity               547
Debt               139
Beta Take from Reuters 1.82
Risk Free Rate Prevailing Yield in India 7%
Market Risk Premium Assuming 8.82% premium for Equity Investments 7%
Interest Paid                 18
Tax Benefit                   6
Interest Net of Tax                 12
Debt               139
Cost of Debt 9%
Cost of Equity 21%
Debt Weight 20%
Equity Weight 80%
WACC 18%
Cash Flow of Mar-23 E            91.54
Growth 3.2%
Present Value of Terminal Cashflow          594.96
Peer Comparision
# Name CMP Rs. Mar Cap Rs.Cr.  B.V. Rs. Annualized ROE % ROCE % Latest EVTI Latest EVTIFM CMP / BV P/E Debt / Eq Div Yld % Growth Rate R % SGR % Ann Total Income Unpledged Prom Hold % PQEIOI QoQ Sales % Qtr Sales Var % QoQ Profits % Qtr Profit Var % Graham's Number Rs.
   1  Hind.Aeronautics           624.05          20,867          377.45            18.48            25.16              0.80              8.43              1.65              9.36              0.08              5.16              8.87              5.19          17,931            89.97                 52            69.53              3.44            57.28          -17.03          752.41
   2  Bharat Dynamics           239.55            4,391          113.64            51.24            37.40              0.89              5.91              2.11              6.91                 -                3.61            35.86            35.43            4,284            87.75                 28            71.29            26.20          564.43       2,946.93          297.65
   3  Thermax           996.85          11,878          235.36            13.91            15.52              1.87            18.91              4.24            37.65              0.09              0.60              9.86            22.96            5,522            61.98                 91              0.63            28.62              0.70            98.50          359.09
   4  Va Tech Wabag           285.55            1,561          213.51              6.60            19.35              0.70            19.89              1.34            12.60              0.43              1.40              5.51              6.88            2,650            24.68               105          -11.98          -23.45          -56.96          -48.70          347.59
   5  ISGEC Heavy        4,943.85            3,635       1,744.59            15.44            13.54              0.71            23.92              2.83            29.39              0.07              0.32            13.91            13.34            4,253            62.27               136              4.66            58.80            29.55            26.73       2,569.51
   6  ION Exchange           372.75               547          234.11            18.49            20.94              0.36            13.14              1.59              9.20              0.40              0.94            16.51            21.54            1,033            44.04               126              9.19              2.84              6.31            44.75          510.78

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