Century Enka Limited — Q3 FY26 earnings call

Call held 9 Feb 2026

Management summary

Century Enka reported a mixed Q3 FY26, showcasing strong profitability growth with EBITDA up 50% YoY and PAT up 69% YoY, driven by significant margin expansion. However, operating revenue declined 17% YoY, and overall volumes for 9M FY26 saw a 12% YoY drop, primarily due to weak demand and intense import competition. The company is actively pursuing anti-dumping duties, expanding renewable energy capacity, and focusing on value-added products to counter market challenges and drive future growth.

Highlights

  • Q3 FY26 EBITDA increased by 50% YoY to INR 41 crores.

  • Q3 FY26 EBITDA margin expanded to 9.93%, up 442 basis points YoY.

  • Q3 FY26 PAT increased by 69% YoY to INR 24 crores.

  • Renewable energy share in power requirements projected to increase from 15% to 30-35% by H2 FY27, yielding INR 10-12 crore annual gain.

  • PTCF commercial sales expected to begin in FY27, with projects targeting a minimum 12% IRR.

Concerns

  • Q3 FY26 Operating Revenue declined by 17% YoY to INR 412 crores.

  • Total volume for 9M FY26 declined by 12% YoY to 52,981 metric tons.

  • Tyre cord fabric sales for 9M FY26 declined by 24% YoY to INR 571 crores.

  • Filament yarn sales for 9M FY26 declined by 19% YoY to INR 599 crores.

  • Margins remain under pressure due to low prices from China and duty-free imports, with nylon filament yarn imports up 50-70% YoY/QoQ.

Key financials

2 periods

Headline

  • Operating Revenue
    ₹412 Cr
    YoY -17% QoQ +1%
  • EBITDA
    ₹41 Cr
    YoY +50% QoQ +29%
  • EBITDA Margin
    9.9%
  • PAT
    ₹24 Cr
    YoY +69% QoQ +6%
  • PAT Margin
    5.8%

9M FY26

  • Total Volume
    52,981 metric tons
    YoY -12%

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

high confidence
  • Capex Capex disclosed
    So, we could look at opportunities to increase our PTCF capacities in future, which is still under discussion because the first phase still needs to get commercialized on a regular basis. But that we are also evaluating other opportunities to get into other products where we could use our nylon and polyester yarns. And those once it is finalized, approved by the board, it will be informed in due course.
  • Debt Debt disclosed
    Actually, we are debt free. In fact, we have positive cash on balance sheet. So, our limits are only limited to some working capital that also is not significantly utilized. So, our ratings are good and we get good return and good interest rate, but if you can see, our finance cost is very low, which is coming in the profit loss.
  • Liquidity Liquidity disclosed Company is debt-free and has positive cash on its balance sheet, with sufficient cash to fund large projects internally.
    Actually, we are debt free. In fact, we have positive cash on balance sheet. ... But as of now, we have sufficient cash to take even a large project with our own internal cash.

Guidance & targets

Capacity

  • PTCF Commercial Sales Start Capacity · FY27 · High confidence begin in FY27
    PTCF approval process is moving ahead smoothly with regular commercial sales expected to begin in FY27.

    — Suresh Sodani

  • Renewable Energy Share Capacity · H2 FY27 · High confidence 30-35%

    From 15% today

    on a company basis, it is about 15% currently. ... And it should increase to about 30-35% post commissioning of second phase, which is expected in later half of FY27.

    — Suresh Sodani

Profitability

  • Annual Gain from Renewable Energy Profitability · annualized basis (full benefit in FY28) · High confidence INR 10-12 crore
    we should have in excess of about 10 to 12 crore rupees gain on account of the additional power which would come on an annualized basis. ... Full benefit would flow in FY28.

    — Suresh Sodani

Volume

  • Volume Growth Volume · Q4 FY26 · Medium confidence better than Q3
    We normally do not give any forward-looking statement, but I can only say that we expect volumes to be better than Q3. ... But we hope that volume should improve for both the segments; the reinforcement as well as the filament yarn.

    — Suresh Sodani

Regulatory

  • Final ruling from DGTR (Anti-Dumping Duty) Regulatory · FY26 · Medium confidence February or March

    Previously December → February or March

    So, most likely, somewhere in February or March, we are expecting the final ruling from DGTR to be get notified.

    — Suresh Sodani

What to watch in Q4 FY26

Anti-Dumping Duty Notification

Next quarter (Feb/March 2026)
Current Expected by March 25th
Target Final ruling notified

Why it matters

Could alleviate margin pressure from Chinese imports and improve competitiveness.

So, most likely, somewhere in February or March, we are expecting the final ruling from DGTR to be get notified.

Risks & concerns

  • Low prices from China and duty-free imports

    high

    Margins continued to remain under pressure due to low prices from China and duty-free imports from free trade agreement countries, with nylon filament yarn imports up 50-70% YoY/QoQ.

    Management acknowledged

  • Weak demand in filament yarn segment

    medium

    Fabric and yarn demand remained weak in Q3 due to extended monsoon and labor availability issues, but expected to improve in Q4.

    Management acknowledged

  • Delay in anti-dumping duty notification

    medium

    The final ruling from DGTR for anti-dumping duties, initially expected by December, was extended to March 25th, delaying potential relief from import pressures.

    Management acknowledged

  • Impact of rising caprolactam prices

    low

    Caprolactam prices increased, but management expects to pass on costs, stating that pricing normally accounts for raw material costs and margins are not expected to be significantly impacted unless the rise is very sudden.

    Both downplayed

Q&A highlights

5 direct, 1 evasive
Reasons for YoY volume drop and impact of GST cuts. Direct
the volumes in the tyre cord segment have been impacted by lower demand, and a lot of it was related to expectation of GST cuts because that was announced somewhere in August. ... on the nylon filament yarn side, the demand was weak in the post Diwali season mainly because, one, it was an extended monsoon this year, and there was a labor availability issues...

Explains the significant volume decline for both segments and provides context on market conditions.

Asked by Moksh Ranka

Quantification of dumping impact and status of anti-dumping duty. Direct
in terms of volume, on a QoQ basis and on a YoY basis, the imports have gone up by -- particularly in the nylon filament yarn are higher by between 50% to 70%... The association has moved the anti-dumping duty application and which is at the final stage of notification. ... somewhere in February or March, we are expecting the final ruling from DGTR to be get notified.

Quantifies the impact of imports on volumes and provides a timeline for a key regulatory action that could improve margins.

Asked by Moksh Ranka

Impact of rising raw material (caprolactam) costs on margins. Direct
No. Actually, our pricing is normally taking into account the RM cost. ... Normally, what happens is if the prices have been low for a longer period, markets take time for the prices to adjust. So, in the sense that going up to right up to the final consumer, so it takes some time. So only the timing could be the issue. Otherwise, we don't expect any margins issue due to rise in the raw material prices.

Addresses a potential margin risk and management's strategy to pass on costs, indicating limited impact.

Asked by Moksh Ranka

Incremental EBITDA margin from PTCF and comparison with existing nylon tyre cord business. Direct
We expect similar margins. Since we report our results in single segment, I will not be able to give you breakups of that. But normally, our projects have a minimum threshold of 12% IRR. So, you can expect that kind of margins to add to the bottom line once the commercial supply start.

Provides insight into the expected profitability of the new PTCF segment and the company's internal hurdle rate for projects.

Asked by Danish

Planned CapEx investments for capacity expansion or PTCF scaling. Partial
So, we could look at opportunities to increase our PTCF capacities in future, which is still under discussion... But that we are also evaluating other opportunities to get into other products where we could use our nylon and polyester yarns. And those once it is finalized, approved by the board, it will be informed in due course.

Indicates potential future growth avenues and capital allocation, though specific plans are still under discussion.

Asked by Danish

Possibility of a buyback given improving business and cash on books. Partial
this has been referred to our board as well as senior management. Promoters are aware of this, and we continue to inform them the views of the investors and the shareholders. But our aim as management is to deploy and utilize the cash on balance sheet for projects... If anything positive does happen with respect to buyback, it would obviously go through a process of approval, and then it would get informed through the stock exchanges.

Addresses shareholder return expectations and management's preference for growth investments, while acknowledging the board's awareness.

Asked by Vijay Subramaniam

Acceptance of new polyester reinforcement cords (PTCF) in the market. Direct
whenever we give a new product, especially in a completely new segment, the tyre companies go through a very rigorous approval process because it's not a regular product and they do multiple audits. ... And that's why this whole approval process has taken time because it is also a learning for us in terms of entering a new even though it's a reinforcement, it's different, slightly more complex when compared to nylon tyre cord, which we have been doing for decades.

Explains the lengthy approval process for new products in the automotive sector and the challenges of market acceptance.

Asked by Vijay Subramaniam

Promoter's low holding and plans to increase stake, given the stock trading below book value. Evasive
We as management have been given the strong feeling of investors and shareholders on this to our promoters as well as the board. So, it is for them to take a call on. But we do convey your sentiments and what the market is looking for. It is for promoters and the board to take a call on that.

Highlights a shareholder concern regarding promoter commitment and valuation, with management deferring the decision to the board.

Asked by Kamal Jeswani

3 min read 7 chapters

Detailed narrative

Q3 FY26 Financial Performance Overview

Century Enka reported Q3 FY26 operating revenue of INR 412 crores, a marginal 1% increase QoQ but a significant 17% decline YoY. Despite the revenue dip, EBITDA saw a robust increase of 50% YoY and 29% QoQ, reaching INR 41 crores. This led to a substantial EBITDA margin expansion to 9.93%, up 442 basis points YoY and 220 basis points QoQ, reflecting improved operational efficiency. Profit after tax (PAT) also grew by 69% YoY and 6% QoQ to INR 24 crores, with a PAT margin of 5.76%.

Nine-Month FY26 Performance and Volume Trends

For the nine months ended FY26, operational revenue stood at INR 1,222 crores, down 22% YoY, while EBITDA declined 13% YoY to INR 92 crores. However, EBITDA margins improved by 75 basis points YoY to 7.56%. Total volume for the period decreased by 12% YoY to 52,981 metric tons, with tyre cord fabric sales down 24% YoY to INR 571 crores and filament yarn sales down 19% YoY to INR 599 crores. The volume decline was attributed to lower demand in the tyre cord segment due to GST cut expectations and weak demand in the filament yarn segment post-Diwali due to extended monsoon and labor issues.

Impact of Imports and Anti-Dumping Duty

Margins continued to face pressure from low-priced imports from China and duty-free imports from free trade agreement countries. Management noted a 50-70% increase in nylon filament yarn imports YoY and QoQ, driven by weak domestic demand in China and US tariffs. The industry association has applied for anti-dumping duties, with a final ruling from DGTR expected in February or March 2026, which could help mitigate the dumping impact.

Strategic Focus on Renewable Energy and PTCF

The company is actively pursuing renewable energy initiatives, with current renewable sources meeting about 15% of power requirements. This is projected to increase to 30-35% by the second half of FY27, expected to generate an annual gain of INR 10-12 crores, with full benefits flowing in FY28. The Polyester Tyre Cord Fabric (PTCF) project is progressing, with commercial sales anticipated to begin in FY27, and management expects similar margins to existing businesses, targeting a minimum 12% IRR for new projects.

Raw Material Price Management

Caprolactam prices increased from October, following a period of low margins for producers. Management believes this trend will continue towards sustainable levels, supported by industry-wide production cuts in China. The company expects to pass on raw material cost increases to customers, maintaining that pricing normally accounts for RM costs and that rising markets should not significantly impact margins, though timing adjustments may occur.

Capital Allocation and Shareholder Returns

Century Enka maintains a debt-free status with a positive cash balance, indicating strong financial health and sufficient internal cash for large projects. While shareholders inquired about a potential buyback, management stated their primary aim is to deploy cash for growth-oriented projects that enhance profitability. They confirmed that shareholder sentiments regarding buybacks are conveyed to the board, which will make the final decision.

Product Development and Market Acceptance

The company's new Polyester Tyre Cord Fabric (PTCF) product is undergoing a rigorous approval process with tyre companies, involving extensive testing and audits. This process is time-consuming due to the critical nature of the product in passenger car tyres, which often use a single-ply reinforcement. Management views this as a learning curve but is hopeful for stabilization and easier commercialization once approvals are secured.

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