PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)

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1 BUY CMP Target Price ION EXCHANGE (INDIA) LIMITED Result Update (PARENT BASIS): Q3 FY15 MARCH 7 th 2015 ISIN: INE570A01014 Index Details Stock Data Sector Industrial Machinery BSE Code Face Value wk. High / Low (Rs.) /81.85 Volume (2wk. Avg. Q.) 9751 Market Cap (Rs. in mn.) Annual Estimated Results (A*: Actual / E*: Estimated) YEARS FY14A FY15E FY16E Net Sales EBITDA Net Profit EPS P/E Shareholding Pattern (%) 1 Year Comparative Graph ION EXCHANGE (INDIA) LTD BSE SENSEX SYNOPSIS Ion Exchange (India) Ltd is pioneered water treatment in India and is today the country's premier company in water and environment management, with a strong international presence. The company s net sales rose by 15.81% y-o-y of Rs million in Q3 FY15 compared to Rs million in the corresponding quarter of previous year. In Q3 FY15, Net profit jumps to Rs million an increase of % against Rs million in Q3 FY14. Operating profit is Rs million as against Rs million in the corresponding period of the previous year. Profit before tax (PBT) at Rs million in Q3 FY15 compared to Rs million in Q3 FY14, registered a growth of %. In Q3 FY15, Revenue from engineering segment grew by 19% y-o-y of Rs million compared to Rs million in Q3 FY14. Net profit grew by 21.71% to Rs million for the end of 9M FY15 from Rs million for the end of 9M FY14. Operating Profit and PAT of the company are expected to grow at a CAGR of 7% and 7% over 2013 to 2016E respectively. PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%) Ion Exchange India Ltd Hercules Hoists Ltd Elgi Equipments Ltd Kirloskar Pneumatic Company Ltd

2 QUARTERLY HIGHLIGHTS (PARENT BASIS) Results updates- Q3 FY15, Rs. In million Dec-14 Dec-13 % Change Net Sales PAT EPS EBITDA The company has achieved a turnover of Rs million for the 3 rd quarter of the financial year 2015 as against Rs million in the corresponding quarter of the previous year. EBITDA of Rs million in Q3 FY15 and increase of 68.25% against the corresponding period of last year. In Q3 FY15, net profit Jumps to % y-o-y of Rs million compared to Rs million in Q3 FY14. The company has reported an EPS of Rs for the 3 rd quarter as against an EPS of Rs in the corresponding quarter of the previous year. Break up of Expenditure During the quarter, total Expenditure rose by 15 per cent mainly on account of increased cost of materials consumed by 15%, other expenditure by 25%, Employee benefits Expenses 16% and other expenses by 25% are the primary attribute for the growth of expenditure when compared to corresponding quarter of previous year. Total expenditure in Q3 FY15 stood to Rs million as against Rs million in Q3 FY14. Break up of Expenditure (Values in Million) Q3 FY15 Q3 FY14 Cost of Material Consumed Purchase of stock in trade Employee Benefit Expenses Depreciation & Amortization Exp Other expenses

3 Segment Revenue COMPANY PROFILE Ion Exchange Ltd (India) is pioneered water treatment in India and is today the country's premier company in water and environment management, with a strong international presence. Formed in 1964, as a subsidiary of the Permutit Company of UK, Ion Exchange became a wholly Indian company in 1985 when Permutit divested their holding. The company currently employees 1,000 people - multi-disciplinary teams of highly experienced professional manager s technologists and scientists, supported by a widespread infrastructure in India and abroad. The Company will expand its reach in geographies which it serve and wherever the company established its presence in the past few years. The focus will be on exports of resins, specialty chemicals, customized water and wastewater treatment plants (WWTP), select EPC contracts in Oil & Gas, Food & Pharmaceutical segment apart from providing comprehensive O&M services. The company s wide range of processes with an integrated approach to deliver total solutions for every market - household, institutional, commercial, industrial and public water supplies, urban and rural, in India and overseas. Comprehensive services such as O&M and BOO/T enable us to meet customer needs totally, offering end benefit conveniently and economically, with single source responsibility. Products and Services products includes water, waste water treatment and recycling plants using various physico-chemical processes for settling, clarification, filtration, disinfection, membranes and ion exchange technology, ion exchange resins; polymers and Polyelectrolyte s for water and non-water processes; boiler cooling water and fireside treatment chemicals.

4 The company also offers technical services such as project management at site, design, erection and commissioning, operation and maintenance of plant, and supply of spares. Manufacturing Plants State-of-the-art units spread across five states of India and in UAE, committed to built-in quality achieved by quality assurance systems, advanced manufacturing processes and continuous training in manufacturing practices, safety and quality issues. Manufacturing plants which are located are 1. Ankleshwar, Gujarat 2. Hosur, Tamil Nadu 3. Patancheru, Andhra Pradesh 4. Rabale, Maharashtra 5. Verna, Goa 6. Wada (Thane), Maharashtra 7. Sharjah, UAE

5 FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions) Balance Sheet as at March31, E FY13A FY14A FY15E FY16E I. EQUITY AND LIABILITIES: A. Shareholders Funds a) Share Capital b) Share Capital Suspense Account c) Reserves and Surplus B. Sub-Total-Net worth Non-Current Liabilities: a) Long-term borrowings b) Deferred Tax Liabilities [Net] c) Other Long Term Liabilities d) Long Term Provisions C. Sub-Total-Long term liabilities Current Liabilities: a) Short-term borrowings b) Trade Payables c) Other Current Liabilities d) Short Term Provisions Sub-Total-Current Liabilities TOTAL-EQUITY AND LIABILITIES (A+B+C) II. ASSETS: D. Non-Current Assets: Fixed Assets Tangible Assets Intangible assets Capital Work in Progress Sub-Total-Fixed Assets Non Current Investments Long Term Loans and Advances Trade Receivables Other non-current assets Sub-Total-Non-Current Assets E. Current Assets: a) Current Investments b) Inventories c) Trade Receivables d) Cash and Bank Balances e) Short Term Loans and Advances f) Other Current Assets Sub-Total-Current Assets TOTAL-ASSETS (D+E)

6 Annual Profit & Loss Statement for the period of 2013 to 2016E Value(Rs.in.mn) FY13A FY14A FY15E FY16E Description 12m 12m 12m 12m Net Sales Other Income Total Income Expenditure Operating Profit Interest Gross profit Depreciation Profit Before Tax Tax Net Profit Equity capital Reserves Face value EPS Quarterly Profit & Loss Statement for the period of 30 JUNE, 2014 to 31 MARCH, 2015E Value(Rs.in.mn) 30-Jun Sep Dec Mar-15E Description 3m 3m 3m 3m Net sales Other income Total Income Expenditure Operating profit Interest Gross profit Depreciation Profit Before Tax Tax Net Profit Equity capital Face value EPS

7 Ratio Analysis Particulars FY13A FY14A FY15E FY16E EPS (Rs.) EBITDA Margin (%) 6.83% 6.97% 7.97% 8.73% PBT Margin (%) 4.23% 4.41% 4.79% 5.19% PAT Margin (%) 2.80% 2.88% 3.26% 3.54% P/E Ratio (x) ROE (%) 11.76% 10.22% 10.41% 10.66% ROCE (%) 26.02% 21.55% 22.89% 23.92% Debt Equity Ratio EV/EBITDA (x) Book Value (Rs.) P/BV Charts

8 OUTLOOK AND CONCLUSION At the current market price of Rs , the stock P/E ratio is at x FY15E and x FY16E respectively. Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs and Rs respectively. Operating Profit and PAT of the company are expected to grow at a CAGR of 7% and 7% over 2013 to 2016E respectively. On the basis of EV/EBITDA, the stock trades at 8.64 x for FY15E and 7.65 x for FY16E. Price to Book Value of the stock is expected to be at 1.94 x and 1.76 x respectively for FY15E and FY16E. We recommend BUY in this particular scrip with a target price of Rs for Medium to Long term investment. INDUSTRY OVERVIEW Slower growth in several key emerging economies, political instability in some parts, as well as a more protracted recession in the euro area ensured that global growth remained subdued at around 2.5% during2013. Global growth is projected to be higher in 2014 at around 3.7 percent, rising to 3.9 percent in Indian economy continued to be vulnerable to recessionary trends in Europe and US. A spell of global financial turbulence caused capital outflows and pressure on the exchange rate, but some strong policy measures helped to provide a degree of stability to the currency. The tough measures to reduce current account deficit and rebuild foreign exchange reserves also showed positive results. While structural and procedural delays and the high cost of borrowing hampered investment and financing, new headwinds appeared in the form of monetary tightening and the heightened challenge of repayment in foreign currency. All this created a negative impact on the economy. Persistent inflation, fiscal imbalances, bottlenecks to investment and other weaknesses & inefficiencies would require further structural reforms in order to be addressed effectively. GDP estimates for the year indicate that Industry grew by a meagre 0.4 per cent. The manufacturing and mining sector declined by 1.4 per cent. The consumer durables segment index contracted by 12.2 per cent. Gross Capital Formation in industrial sector comprising of mining, manufacturing, electricity and construction has declined from 31.8 in to 28.3 in The overall decline in growth rates of fixed investments hints at further deceleration in investment in key segments of industry during the year.

9 In spite of the overall depressed environment, there was relatively better performance by some of the core sector industries like steel, fertilizers, cement etc. Further, since December 2013 companies are also witnessing an increase in the number of new projects announced. The new government is also likely to initiate actions that would bolster capital expenditure, as companies are looking for macroeconomic stability and forward movement on some structural issues before commencing operations. Consequently, the companies are experiencing an increase in demand which is likely to result in better business opportunities in the second half of this end FY15. Water treatment industry as a whole faced challenges in the domestic market as both the large and the small players suffered due to reduced flow of new projects and severe cash crunch affecting the customers. Even some of the larger engineering focused players were under severe cash stress and were struggling to continue with the smooth flow of operations. Companies focused on chemicals, resins and specialty chemicals have fared better than their engineering counterparts. While margins continue to be under some stress and growth is limited, they have not struggled as they are not as reliant on new projects. They have also been less affected by the ongoing liquidity crunch. The pace of entry of new players in the industry slowed down during the year and some degree of consolidation was also witnessed amongst the existing players. However, towards the end of the fiscal year there was renewed interest with respect to water related initiatives which led to expectations building up in this sector. Disclaimer: This document is prepared by our research analysts and it does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The information contained herein is from publicly available data or other sources believed to be reliable but we do not represent that it is accurate or complete and it should not be relied on as such. Firstcall Research or any of its affiliates shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Firstcall Research and/ or its affiliates and/or employees will not be liable for the recipients investment decision based on this document.

10 Firstcall India Equity Research: C.V.S.L.Kameswari Pharma & Diversified U. Janaki Rao Capital Goods B. Anil Kumar Auto, IT & FMCG M. Vinayak Rao Diversified G. Amarender Diversified Firstcall Research Provides Industry Research on all the Sectors and Equity Research on Major Companies forming part of Listed and Unlisted Segments For Further Details Contact: Tel.: / / Telefax: / info@firstobjectindia.com