Multibagger smallcap water treatment firm announces stock split

in the midcap and smallcap space, fundamentally strong companies Their profits and revenue were seen to more than double on a year-on-year (YoY) basis. Operational performance was another notable highlight of the quarter.

As a result, shareholders in the sector have been 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 everything you want to know.

Ion Exchange announced the split on 20 April 2023.

The company will split the shares in the ratio of 1:10. It means sub-division of an equity share of the company whose face value is 10 each of ten equity shares of face value of Rs.1 each.

The board has approved the stock split to increase liquidity in the capital market, widen the shareholder base and make the shares more affordable for small investors.

The record date for sub-division of equity shares will be decided by the Board and notified to the stock exchanges.

Issuance of more shares to existing shareholders through a stock split increases the number of shares outstanding. While the market value 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.

After the stock split, the number of outstanding shares will increase to 1.7 billion (bn) from the current 170 million (m).

The expected closing time is three months from the date of approval by the shareholders.

A look at the financial position of the company

For the December 2022 quarter, the company’s revenue grew by 31.9% YoY from 5.1 billion 3.9 billion in the same quarter last year.

net profit on 480m, up 69.1% YoY 284 m in the December 2021 quarter.

This was due to consistent order wins and cost reduction of the company’s input costs.

For the first nine months (April 2023 to December 2023) of FY 2022-23, the company reported a 27.5% growth in revenue 13.4 billion, against 10.8 billion a year ago.

Net profit increased by 41.1% during the same period 1.1 billion. This increase in earnings was due to higher sales and reduced finance cost of the company.

Over the past 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%.

Increase in demand and higher realizations helped the company’s earnings.

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

By March 2022, the company haszero debt on its books,

In addition, the company is set to benefit from the government’s central budgetary support for infrastructure development and private spending.

Finance Ministry is looking to increase infrastructure spending by 33% 10 trillion (tn) in FY2024. This will give a boost to the revenue growth of the sector.

With a healthy order book and improving profitability, the debt metrics will also improve in the next financial year as higher order inflows will boost its revenues.

How have Ion Exchange shares performed recently?

Ion Exchange share price has declined by 2% in the last one month.

The company’s shares have gained 88% in the last one year. The shares have given multibagger returns in the last three years.

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

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

about ion exchange

Ion Exchange (India) Limited, a leader in the Indian water treatment industry provides total water management solutions to industry, homes and communities.

It is one of the very few companies in the world with a wide range of technologies, products and services covering the entire spectrum of water and wastewater treatment.

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

Apart from this, it also forayed into urban and rural public health sector for infrastructure 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.

Disclaimer: This article is for information purposes only. This is not a stock recommendation and should not be treated as such.

This article is syndicated equitymaster.com