Century Enka Limited — Q2 FY26 earnings call

Call held 10 Nov 2025

Management summary

Century Enka reported a mixed Q2 FY26, with revenue declining 24% YoY to INR 409 crores, but PAT increasing 4% YoY and 45% QoQ to INR 22 crores. EBITDA saw a strong 59% QoQ increase to INR 32 crores, driven by sequential volume improvement in filament yarn and falling raw material prices. However, the tyre cord fabric segment continued to face challenges from subdued demand and high imports, while the filament yarn segment grappled with low-priced imports from China. The company is progressing with its PTCF project, with commercial supplies expected in Q4 FY26, and is actively pursuing anti-dumping duties to address import pressures.

Highlights

  • Q2 FY26 PAT increased 4% YoY and 45% QoQ to INR 22 crores.

  • Q2 FY26 EBITDA increased 59% QoQ to INR 32 crores, with EBITDA margin at 7.73%.

  • Filament yarn segment sales volume improved sequentially following successful plant restart and revamp.

  • Investments in mother yarn and value-added products contributed to better margin realization.

  • Renewable energy initiatives at Bharuch plant aided in controlling power costs and improving cost efficiency.

  • Commercial supplies for the PTCF project are expected to start in Q4 FY26.

  • Caprolactam prices are believed to be near bottom, reducing the risk of significant inventory losses.

Concerns

  • Q2 FY26 operating revenue declined almost 24% YoY to INR 409 crores.

  • H1 FY26 EBITDA declined around 35% YoY to INR 52 crores.

  • Tyre cord fabric segment volumes remained impacted by subdued demand and higher imports from China.

  • Margins remained under pressure due to low-cost imports and volatile raw material prices.

  • Significant increase in low-priced imports from China in the filament yarn segment, with imports doubling YoY.

  • Continuing geopolitical and trade tensions along with tariff related uncertainties remain a key risk for the value chain.

Key financials

2 periods

Headline

  • Operating Revenue
    ₹409 Cr
    YoY -24% QoQ +2%
  • EBITDA
    ₹32 Cr
    YoY -17% QoQ +59%
  • EBITDA Margin
    7.7%
  • PAT
    ₹22 Cr
    YoY +4% QoQ +45%
  • PAT Margin
    5.5%

H1 FY26

  • Total Volumes
    34,992 metric tons
    YoY -14%

What they filed

Q1 FY27: revenue up 37.8%, net profit up 306.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue536 493 444 402 409 −24%412 −16%484 +9%554 +38%
EBITDA38 27 9 20 32 −16%41 +52%55 +511%86 +330%
Net profit22 14 7 15 23 +5%24 +71%40 +471%61 +307%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

medium confidence
  • Capex Capex disclosed
    • PTCF project ₹100 Cr
    • Value-added products (over three years) ₹50 Cr
    I mentioned it's about INR 100 cross for the entire process. (Page 12) / Almost close to INR 50 crores in over three years. (Page 11)
  • Debt Debt disclosed
    Sir, actually, I just wanted to ask one thing that you have maintained a very strong cash position and limited debt. (Page 13)
  • Liquidity Liquidity disclosed Company maintains a very strong cash position.
    Sir, actually, I just wanted to ask one thing that you have maintained a very strong cash position and limited debt. (Page 13)

Guidance & targets

Capacity

  • PTCF Commercial Supplies Capacity · Q4 FY26 · High confidence Start in Q4
    So, it is going on. We are we are working with two, three tyre companies, and we expect some commercial supplies to start in Q4. (Page 6)

    — Suresh Sodani

  • PTCF Plant Capacity Share of Industry Demand Capacity · Current · High confidence About 10%
    We do not give product-wise breakups because of competitive reasons, but it would be about 10% of the industry demand. (Page 7)

    — Suresh Sodani

  • Renewable Power Share of Total Requirement Capacity · Next 1-2 years · High confidence 30-35%

    From 15-20% today

    So currently, on a totality basis, about between -- I mean, since it's variable, between 15% to 20% of our total power requirement is met by the renewable power. And we intend to, in the next between one to two years, take it to at least about 30% to 35% of the total requirement. (Page 13)

    — Suresh Sodani

Profitability

  • Value-Added Products Share in NFY Portfolio Profitability · Future · High confidence Cross 50% or more

    From Over 35% today

    So again, without being very specific, it's over 35% of our portfolio is in value-added products. (Page 11) / We expect it to cross 50% or even more. (Page 11)

    — Suresh Sodani

What to watch in Q3 FY26

PTCF Commercial Supplies Commencement

Q4 FY26
Current Expected in Q4 FY26
Target Commercial operations started

Why it matters

Successful commencement of PTCF commercial supplies will open a new revenue stream and validate the recent CapEx.

So, it is going on. We are we are working with two, three tyre companies, and we expect some commercial supplies to start in Q4. (Page 6)

Risks & concerns

  • Low-price dumping and overcapacity from China in filament yarn

    high

    Significant increase in low-priced imports from China, with huge overcapacity in China's filament yarn segment, making India vulnerable due to low duty protection.

    Both acknowledged

  • Subdued demand and high imports in tyre cord fabric segment

    medium

    Volumes continued to remain impacted due to subdued demand and higher imports from China.

    Management acknowledged

  • Margin pressure from low-cost imports and volatile raw material prices

    medium

    Margins remained under pressure on account of these low-cost imports and volatile raw material prices.

    Management acknowledged

  • Geopolitical and trade tensions, tariff uncertainties

    medium

    Continuing geopolitical and trade tensions along with tariff related uncertainties, remain a key risk for the value chain.

    Management acknowledged

  • Potential for further caprolactam price decline due to international oversupply

    low

    International oversupply could be one of the reasons that the prices could come down further, though the pace has moderated.

    Management acknowledged

Q&A highlights

8 direct
Volume expectations for the current quarter and caprolactam price outlook Direct
So, while we do not give any forward looking statements in terms of volumes or realizations, we do expect better volumes compared to Q2, mainly from the reinforcement market... As far as the caprolactam is concerned, it was in the range of about $1,200 for the quarter. We expect that it should not go down significantly now because it is one of the lowest levels...

Provides management's outlook on future volumes and raw material cost trends, which are key drivers for profitability.

Asked by Vipulkumar Shah

Status of anti-dumping duty plea by the industry for nylon filament yarn Direct
All the interactions with the industry players, with the producers, with the consumers, collection of data is at almost the final stage... So, we expect some positive developments in Q3, hopefully, before December.

Highlights a potential regulatory catalyst that could significantly improve margins in the nylon filament yarn segment by addressing low-priced imports.

Asked by Vipulkumar Shah

Status of PTCF project approval and timeline for commercial supplies Direct
So, it is going on. We are we are working with two, three tyre companies, and we expect some commercial supplies to start in Q4.

Confirms the progress and expected commercialization timeline for a new product, indicating future revenue streams.

Asked by Vipulkumar Shah

CapEx incurred for the PTCF project and expected Internal Rate of Return (IRR) Direct
Approximately 100 crores. / We have an internal target of IRR of more than 12%.

Quantifies the investment and expected return on a new strategic project, providing insight into capital allocation efficiency.

Asked by Vipulkumar Shah

Company's strategy to counter cheap imports from China in yarn and tyre cord segments Direct
So in the yarn, it has been always that we want to move up to value chain in terms of more specialized products... As far as the reinforcement is there, we continue to work to provide superior service and better quality compared to imports.

Outlines the company's competitive strategy against low-cost imports, focusing on value-added products and superior quality/service.

Asked by Anish

Deployment of surplus cash and capital allocation strategy Direct
So, I mean, we have followed a consistent dividend policy that would continue. But mostly, this would get deployed in new projects because we see a lot of opportunities in growing this company in new segments or into new verticals.

Clarifies the company's approach to capital allocation, prioritizing growth investments over other uses of cash.

Asked by Krupa

Total domestic nylon filament yarn demand and import levels Direct
So, the demand is around just under 2 lakh tons per annum on an annualized basis and the imports have been close to between 30% to 35% of that demand. Normal is between 15% to 20%... Almost 90% to 95% is China.

Provides crucial market size and import penetration data, highlighting the scale of the import challenge, predominantly from China.

Asked by Falguni Dutta

Current capacity utilization in tyre cord and filament yarn division Direct
So, against capacity of 92,000 on combined basis for all products, our production was for the quarter -- I mean, sales, sorry, sales volume was about 17,920 tons. ...about 72,000, if I were to just multiply 18,000 into four. So, 72,000 on 92,000.

Gives an indication of current operational efficiency and potential headroom for volume growth, implying around 78% utilization.

Asked by Vipulkumar Shah

2 min read 5 chapters

Detailed narrative

Q2 and H1 FY26 Financial Performance Overview

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).

Segmental Performance and Market Dynamics

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.

Raw Material Trends and Cost Management

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.

Strategic Initiatives and Future Outlook

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%.

Capital Allocation and Shareholder Returns

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.

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