At a Glance
Century Enka (CEL), the nylon yarn and tyre cord fabric maker, posted Q1 FY26 sales ₹402 Cr (↓24% YoY) and PAT ₹15.35 Cr (↓37% YoY). OPM remains wafer-thin at 5%, as raw material inflation continues to chew profits. Despite being almost debt-free and trading at 0.76x book, the market gave it a -4.4% spanking to ₹494. Throw in a ₹7.3 Cr excise dispute and we’ve got enough masala for a daily soap.
Introduction
Once the Birla-backed darling of synthetic yarn, Century Enka now feels like that old pair of nylon socks—functional but not exciting. With a low promoter holding of 24.9%, shrinking sales, and inconsistent margins, CEL is hanging by the dividend yield (2%). But wait—at a P/E of 18.3, investors seem to still believe this old warhorse can gallop.
Business Model (WTF Do They Even Do?)
CEL manufactures Nylon Filament Yarn (NFY), Nylon Tyre Cord Fabric (NTCF), and Polyester Tyre Cord Fabric (PTCF).
- Clients: Tyre manufacturers, apparel brands, conveyor belt makers.
- Products: From sarees to scooters, they weave it all.
- Edge: Vertical integration and Aditya Birla legacy.
- Weakness: Heavy dependence on the cyclical auto and textile industry.
In short, they spin plastic into gold, but lately, the gold looks a bit tarnished.
Financials Overview
Q1 FY26 Performance:
- Revenue: ₹402 Cr (↓24% YoY)
- EBITDA: ₹20 Cr (OPM 5%)
- PAT: ₹15.3 Cr (↓37% YoY)
- EPS: ₹7.02
FY25 Full Year:
- Revenue: ₹2,002 Cr
- PAT: ₹67 Cr
- Margins: OPM 6%, PAT 3%
Commentary: Sales contraction and profit erosion show weak demand and pricing pressure. Other income (₹14 Cr) continues to prop up bottom line—without it, things look grim.
Valuation
CMP ₹494 | Market Cap ₹1,080 Cr
Fair Value Calculations
- P/E Method:
EPS FY25 ₹30.7 × sector P/E 12 → ₹370 - EV/EBITDA:
EV ₹1,080 Cr / EBITDA ₹94 Cr → 11.4x (fair around 8x → ₹350) - DCF:
Assuming 5% growth, WACC 10% → ₹300 – ₹350
Fair Value Range: ₹300 – ₹370 (CMP is above comfort zone, but cheap vs book value).
What’s Cooking – News, Triggers, Drama
- Excise Duty Dispute: ₹7.3 Cr deposited under protest.
- Low Promoter Holding: Just 24.9%, leaving room for volatility.
- Dividend Charm: 2% yield, steady payouts (34.8% payout ratio).
- Auto Sector Link: Demand revival in tyres could help NTCF sales.
Balance Sheet
| Particulars (₹ Cr) | Mar 23 | Mar 24 | Mar 25 |
|---|---|---|---|
| Assets | 1,623 | 1,688 | 1,786 |
| Liabilities | 1,623 | 1,688 | 1,786 |
| Net Worth | 1,322 | 1,368 | 1,422 |
| Borrowings | 68 | 52 | 37 |
Remark: Debt almost wiped out—balance sheet is cleaner than the company’s OPM.
Cash Flow – Sab Number Game Hai
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Operating CF | 219 | 88 | 118 |
| Investing CF | -251 | -47 | -76 |
| Financing CF | 29 | -43 | -42 |
Comment: Positive ops cash, but heavy capex/investment drain.
Ratios – Sexy or Stressy?
| Ratio | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROE | 7% | 4% | 4.2% |
| ROCE | 8% | 4% | 6% |
| P/E | 14x | 21x | 18x |
| PAT Margin | 4% | 3% | 3% |
| D/E | 0.05 | 0.03 | 0.02 |
Remark: Returns are as exciting as a Monday morning. Weak ROE is the red flag.
P&L Breakdown – Show Me the Money
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | 2,072 | 1,744 | 2,002 |
| EBITDA | 142 | 83 | 115 |
| PAT | 90 | 46 | 67 |
Remark: Revenue recovery in FY25 but margins still anaemic.
Peer Comparison
| Company | Revenue (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| KPR Mill | 6,388 | 797 | 46 |
| Vardhman Textile | 9,861 | 852 | 14 |
| Trident | 6,951 | 436 | 34 |
| Century Enka | 1,875 | 58 | 18 |
Remark: Small player with mid P/E, but low returns.
Miscellaneous – Shareholding, Promoters
- Promoters: 24.9% (low).
- FIIs: 2.2% (falling).
- DIIs: 9.9% (stable).
- Public: 63.1%.
Promoter Bio: Aditya Birla Group legacy name, but this is more “legacy” than “growth”.
EduInvesting Verdict™
Century Enka is an undervalued asset play (CMP < book value) with a strong balance sheet and consistent dividends. However, operational performance is weak, growth is stagnant, and margins are under pressure.
SWOT
- Strengths: Debt-free, dividend yield, book value cushion.
- Weaknesses: Low ROE/ROCE, dependence on commodity cycles.
- Opportunities: Tyre industry recovery, polyester/nylon demand rebound.
- Threats: Imports from China, raw material cost swings.
Conclusion:
Century Enka is like that vintage scooter—reliable but slow. It appeals to value hunters who like dividends and low risk, but growth chasers should look elsewhere. Until margins stretch, this nylon story will remain lukewarm.
Written by EduInvesting Team | 01 August 2025
SEO Tags: Century Enka, Nylon Tyre Cord, Q1 FY26 Results, Textile Industry Analysis
