Century Enka

Century Enka reported Q2 FY26 operating revenue of INR 409 crores, a decline of 24% YoY but a 2% increase QoQ. EBITDA for the quarter stood at INR 32 crores, declining 17% YoY but increasing significantly by 59% QoQ, with an EBITDA margin of 7.73%. Profit after tax (PAT) was INR 22 crores, up 4% YoY and 45% QoQ, achieving a PAT margin of 5.46%. For the first half of FY26, operational revenue was INR 810 crores (down 24% YoY), EBITDA was INR 52 crores (down 35% YoY), and net profit was INR 38 crores (down 17.5% YoY).

The tyre cord fabric segment continued to face challenges in Q2 FY26 due to subdued demand and higher imports from China, though some improvement was noted compared to the previous quarter. In the filament yarn segment, sales volume improved sequentially following the restart and revamp of the plant after a fire disruption. However, this segment experienced significant pressure from low-priced imports from China, which doubled YoY, impacting margins. Total volumes for H1 FY26 declined 14% YoY to 34,992 metric tons, with tyre cord fabric sales down 32% to INR 365 crores and filament yarn sales down 15% to INR 404 crores.

Caprolactam prices, a key raw material, continued to decline during the quarter, reaching approximately $1,200, which is considered near historical lows. Management believes prices are close to bottoming out, and the company avoided significant inventory losses due to reduced inventory levels and a focus on value-added products. Renewable energy initiatives at the Bharuch plant have contributed to controlling power costs and improving cost efficiency, with 15-20% of total power requirements currently met by renewable sources, targeted to increase to 30-35% in the next 1-2 years.

The company is actively pursuing the imposition of anti-dumping duties on nylon filament yarn to address low-price dumping from China, with positive developments expected in Q3 FY26. The approval process for the Polyester Tyre Cord Fabric (PTCF) project is progressing well, with commercial supplies anticipated to commence in Q4 FY26. This project, with a CapEx of approximately INR 100 crores and an expected IRR of over 12%, aims to capture about 10% of the industry demand. Century Enka also continues to focus on increasing its value-added products portfolio, which currently constitutes over 35% of its NFY business, with a target to exceed 50%.

Century Enka maintains a strong cash position and limited debt. The company follows a consistent dividend policy, but its primary focus for deploying surplus cash is on new projects to drive growth, sustainability, and profitability. Besides the INR 100 crore CapEx for PTCF, the company has invested approximately INR 50 crores over the last three years in value-added products to enhance its portfolio and margin realization.