Century Enka

Century Enka reported a significant decline in its Q1 FY26 financial performance. Operating revenue stood at INR 402 crores, marking an almost 24% year-on-year decrease. EBITDA for the quarter was INR 20 crores, a 52% year-on-year decline, resulting in an EBITDA margin of 4.96%. Profit after tax (PAT) was INR 15 crores, down almost 37% year-on-year, with a PAT margin of 3.84%. Total sales volume also decreased by 17% year-on-year to 17,072 metric tons.

The Tyre Cord Fabrics segment saw its revenue decrease by approximately 35% year-on-year to INR 181 crores, primarily due to lower demand from the tyre industry and increased imports from China. The Filament Yarn segment's revenue also declined by around 15% year-on-year to INR 193 crores, impacted by a fire at the Bharuch plant in February 2025. However, the Bharuch plant resumed full operations from June 2025, and management expects NTCF demand to improve in Q2.

Caprolactam prices, a key raw material, continued to decline to record low levels, contributing to margin pressure. The company noted that falling prices impact margins due to the valuation of existing stock. While there is a correlation with crude oil prices, it is not always direct or immediate. The management highlighted that the normal target EBITDA margin for the company is between 6% to 8%, which was not achieved this quarter.

The company's ongoing capacity expansion is focused on polyester tyre cord, a segment used in passenger car tyres where Century Enka previously had no presence. This segment is expected to grow faster than nylon tyre cord. The new capacity is projected to generate INR 100-120 crores in revenue at full utilization. Most large capex projects were completed by March 2025, with current investments primarily for cost reduction, balancing equipment, and energy conservation. The company's capital allocation strategy prioritizes strategic investments for growth.

Geopolitical and trade tensions, along with tariff-related uncertainties, remain a key risk. While the company has little direct export exposure to the US, indirect impacts could arise if end products like tyres and garments are affected by tariffs. Century Enka is actively engaging with government bodies through associations to address competitive pressures from imports, advocating for a Quality Control Order (QCO) process and a minimum import price for Tyre Cord Fabrics to ensure fair competition and prevent substandard material entry.