Aditya Birla-backed synthetic yarn veteran is trading below book value, but earnings feel like they’re stuck in the 90s. Value stock or value trap? Let’s untangle the yarn.
1. 🧠 At a Glance
Century Enka Ltd is a synthetic yarn manufacturer known for nylon filament yarns and tyre cord fabrics under the “Enkalon” brand. It’s a legacy B.K. Birla company with roots in Dutch tech and a footprint across textile and tyre sectors. But in FY25, net profit is back to ₹67 Cr – almost the same as FY14.
2. 🎬 Introduction with Hook
You know that one uncle who made decent money in the 90s, bought a Bajaj scooter, a 2BHK flat in Dadar, and then… just coasted? That’s Century Enka for you.
It was the synthetic yarn king. Now? It’s hanging in there – not bankrupt, but not winning races either.
The stock trades at just 0.78x book, and looks cheap. But as we always say: cheap vs. value – difference hota hai bhai.
3. 🏭 Business Model (WTF Do They Even Do?)
- 🧵 One of India’s largest producers of Nylon Filament Yarn (NFY) and Nylon Tyre Cord Fabric (NTCF)
- 🧦 Sells yarns for fish lines, sarees, innerwear, activewear, conveyor belts, etc.
- 🚛 Supplies tyre reinforcement fabric to two-wheeler to off-road tyre companies
- 🧪 Entered Polyester Tyre Cord Fabric (PTCF) space – used in cars
- 🛠️ Also does contract manufacturing and sells via brand “Enkalon”
Basically, if it stretches or spins – they’re probably in it.
4. 💰 Financials Overview – Profit, Margins, ROE, Growth
| Metric | FY25 | 5-Year Avg |
|---|---|---|
| Revenue | ₹2,002 Cr | Flat-ish |
| Net Profit | ₹67 Cr | Falling 📉 |
| OPM | 6% | 5–8% range |
| ROE | 4.8% | Weak |
| Sales CAGR (5Y) | 7% | Meh |
| Profit CAGR (5Y) | -6% | Ouch |
Profit fell by 60% from FY22 levels (₹184 Cr). And unlike nylon, that curve ain’t bouncing back.
5. 💸 Valuation – Is It Cheap, Meh, or Crack?
Let’s look at the math:
| Metric | Value |
|---|---|
| CMP | ₹509 |
| Book Value | ₹651 |
| P/B | 0.78x ✅ |
| P/E (TTM) | 16.6x |
| Dividend Yield | ~2% |
🧮 Fair Value Range:
- If we apply a 10x P/E (for cyclical, low-growth businesses) on FY25 PAT of ₹67 Cr → ₹670 Cr market cap → FV = ₹307/share
- At 1x Book → ₹651 Cr → FV = ₹651/share
📌 EduInvesting FV Range: ₹310 – ₹650
Anything above ₹650 means Mr. Market is on nylon.
6. 🔍 What’s Cooking – News, Triggers, Drama
- 🔥 Fire Alert! In June 2025, a fire broke out at the NFY plant; ₹36L paid in compensation. Partial operations resumed.
- 💰 Dividend declared (record date 5 Aug 2025)
- 🔄 Re-appointment of MD Suresh Sodani & Independent Director Krupa Gandhi
- 🏗️ FY24 capex visible via CWIP jump (₹4 Cr → ₹13 Cr), but no blockbuster expansion
So far, no new product, JV, or mega plan. Just status quo maintenance.
7. 🧾 Balance Sheet – How Much Debt, How Many Dreams?
- Total Debt: ₹37 Cr – almost debt-free ✅
- Net Worth: ₹1,422 Cr
- CWIP has declined post-FY22 peak
- Investments rose to ₹413 Cr – safe haven or under-leveraged?
Stable balance sheet. Conservative. But maybe a little too sleepy.
8. 🔁 Cash Flow – Sab Number Game Hai
| Year | CFO (₹ Cr) | FCF? |
|---|---|---|
| FY23 | 219 | Yes |
| FY24 | 88 | Meh |
| FY25 | 118 | Decent |
Positive and stable cash flow – they’re not burning money, just not printing it either.
9. 📊 Ratios – Sexy or Stressy?
| Metric | FY25 Value |
|---|---|
| ROCE | 7% |
| ROE | 4.8% |
| OPM | 6% |
| Working Cap Days | 125 ❌ |
| Inventory Days | 87 |
| Debtor Days | 32 ✅ |
ROE is low, margins are razor-thin, and working capital is bloated like an uncle after Diwali sweets.
10. 🧾 P&L Breakdown – Show Me the Money
- 🏭 Sales dropped from ₹2,098 Cr (FY22) → ₹2,002 Cr (FY25)
- 📉 Operating margins compressed from 13% (FY22) to 6%
- 💸 Other income rose – ₹37 Cr in FY25 – quietly boosting PAT
- 📉 EPS fell from ₹84.28 (FY22) → ₹30.71 (FY25)
Basically: topline flat, margins squashed, profits living on side income.
11. ⚔️ Peer Comparison – Who Else in the Game?
| Peer | ROCE | P/E | OPM | Sales (Cr) | PAT (Cr) |
|---|---|---|---|---|---|
| Garware Tech | 24.6% | 39x | 20.7% | ₹1,540 | ₹231 |
| KPR Mill | 19.8% | 47x | 19.5% | ₹6,388 | ₹797 |
| Century Enka | 6.8% | 16.6x | 5.7% | ₹2,002 | ₹67 |
Not looking pretty. All peers have better margins, profits, and brand premium. Century Enka’s moat is… maybe nostalgia?
12. 🧠 Miscellaneous – Shareholding, Promoters
| Holder Type | % Holding |
|---|---|
| Promoters | 24.87% ❌ |
| FIIs | 2.71% |
| DIIs | 9.24% |
| Public | 63.18% 🚨 |
Promoter holding is very low. Retail investors dominate. That means: volatility, exit issues, and risk of operator game.
13. 🧵 EduInvesting Verdict™
Century Enka is a nostalgia stock that still runs on old machinery and older management style. It’s not dead – but it’s also not wired for hypergrowth. The 0.78x P/B attracts value investors, but profits haven’t scaled, margins are limp, and working capital is bloated.
Think of it as the LIC of yarns. Safe, slow, but maybe not your first crush anymore.
📌 Final Word: Decent business. Not-so-decent growth. If you believe in re-rating stories or turnaround via tyre demand revival, this is your bet. If not, it’s more like… yarn, yarn, everywhere, but no thrill to invest.
✍️ Written by Prashant | 📅 3 July 2025
Tags: Century Enka, Nylon Yarn, Tyre Cord Fabric, Value Stock, B.K. Birla, Synthetic Textiles, Century Textiles, Old Economy Stocks, Dividend Yield, Stock Analysis, EduInvesting
