Century Enka Limited — Q4 FY25 earnings call

Call held 7 May 2025

Management summary

Century Enka reported strong full-year FY25 results with 15% revenue growth and 55% net profit growth, driven by higher volumes and value-added products. However, Q4 FY25 saw a significant decline in revenue and profitability due to falling Caprolactam prices, increased imports, and a fire incident at its Bharuch plant. The company is focused on cost reduction, increasing value-added product share, and expects commercial supplies of Polyester Tyre Cord Fabric (PTCF) to begin in Q4 FY26.

Highlights

  • FY25 Operational Revenue grew 15% YoY to ₹2,002 crores, driven by strong performance in H1 FY25.

  • FY25 EBITDA increased 39% YoY to ₹115 crores, with EBITDA margin improving to 5.73%.

  • FY25 Net Profit grew 55% YoY to ₹66 crores, with PAT margin at 3.32%.

  • Total volume for FY25 grew significantly by 50% YoY to 78,425 metric tons.

  • Focus on value-added products continues, with current share at 25-30% of NFY topline, targeting 50-60% in 2-3 years.

Concerns

  • Q4 FY25 Operating Revenue declined 5% YoY to ₹444 crores.

  • Q4 FY25 EBITDA saw a significant decline of 74% YoY to ₹9 crores, with margin at 1.98%.

  • Q4 FY25 PAT declined 67% YoY to ₹7 crores, with margin at 1.53%.

  • Caprolactam prices fell consistently, dropping by ~$410/ton from March '24 to April '25, leading to inventory losses and margin pressure.

  • Fire incident at Bharuch plant in February-end led to ₹8 crores in repair costs, impacting Q4 expenses.

Key financials

2 periods

Q4 FY25

  • Operating Revenue
    ₹444 Cr
    YoY -5%
  • EBITDA
    ₹9 Cr
    YoY -74%
  • EBITDA Margin
    2%
  • PAT
    ₹7 Cr
    YoY -67%
  • PAT Margin
    1.5%
  • Total Volume
    18,149 metric ton
    YoY +1%

FY25

  • Operational Revenue
    ₹2,002 Cr
    YoY +15%
  • EBITDA
    ₹115 Cr
    YoY +39%
  • EBITDA Margin
    5.7%
  • Net Profit
    ₹66 Cr
    YoY +55%
  • PAT Margin
    3.3%
  • Total Volume
    78,425 metric ton
    YoY +50%

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.

Segment breakdown

Share of Q4 FY25 Revenue
₹426 Cr Total
  • Filament Yarn ₹223 Cr 52.3%
  • Tyre Cord Fabric ₹203 Cr 47.7%

Capital allocation

medium confidence
  • Capex Capex disclosed
    • Repairs and revamping of plant and equipment damaged by fire ₹8 Cr
    • Investments in power reduction consumption equipment
    Yes. We had a fire as I mentioned my opening comments in end of February, and we started post our survey by the insurance Company to revamp and restart to repair the damaged machinery. So in this quarter, we have spent about Rs. 8 crores which is part of our other expenses and since the claim has been accepted and the insurance company has given go ahead to make the repairs and maintenance, we also accounted for the insurance claim receivable to the extent of about Rs. 6 crores, which is reflected in our other income. So these are the 2 income which are coming in two different line items in our published accounts. Otherwise, compared to last year, we have increased our expenditure particularly on the repairs because last year's financial performance was weak because of multiple factors and whatever was non-essential or non-critical repairs were actually postponed and actually incurred in the current year. And to that extent, our other expenses, particularly on repairs of machinery is higher, but now we don't have anything pending in terms of normal repairs and maintenance and going forward it will be regular repairs and maintenance from FY '26.

Guidance & targets

Capacity

  • Affected plant operational status Capacity · End of June · High confidence Fully operational
    Revamping and repairs of affected plant is in full swing, and we expect the plant to be fully operational by the end of June.

    — Suresh Sodani

Commercial Operations

  • Polyester Tyre Cord Fabric (PTCF) commercial supplies start Commercial Operations · Q4 FY26 · High confidence Start from Q4 FY26
    Approvals of Polyester Tyre Cord Fabric are currently in progress with multiple customers. We expect commercial supplies to start from Q4 FY '26 after clearing all stages of approval.

    — Suresh Sodani

Product Mix

  • Share of value-added products in NFY topline Product Mix · Next 2-3 years · Medium confidence 50%-60%

    From 25%-30% today

    So actually we have grown our value-added portfolio compared to last year by close to 15% and it is now close to about between 25%-30% value terms of our NFY topline and the margins are also better than our base products. So we will continue to expand or make more of value-added products and reduce our portfolio of baseline products. And this will continue because we also need to make investments in a gradual period and also develop the market in certain cases because as mentioned in our communication multiple times, within the value-added products, also we are looking at niche products so that we can maintain the competitive edge. So it is going to be between 2-3 years period, we will continue to expand and ideally we should take it close to between 50%-60% or even more of our total NFY portfolio.

    — Suresh Sodani

Profitability

  • Operating EBITDA margin (steady state) Profitability · Steady state condition · Medium confidence 6%-8%
    So we expect operating EBITDA margin of between 6%-8% in steady state condition.

    — Suresh Sodani

Volume

  • Volume growth Volume · FY26 · Medium confidence 5%-10%
    So this year was the highest ever volume of 78,000 we have done. And as I said there are so many geopolitical challenges that to really comment on one volume. But yes, we expect between 5%-10% growth in the volume for the current year. In a good case, it can be even more than 10% in an adverse scenario where we are threatened by more imports, it can be close to these levels or about 5%.

    — Suresh Sodani

Capacity Utilization

  • PTCF capacity utilization for breakeven Capacity Utilization · High confidence 60%
    However, on a normalized basis, we should be breakeven at about 60% of our capacity utilization, easily break even at 60%.

    — Suresh Sodani

What to watch in Q1 FY26

Bharuch plant operational status

End of June
Current Revamping and repairs in full swing
Target Fully operational

Why it matters

Ensuring the plant is fully operational is crucial for production capacity and mitigating further losses from the fire incident.

Revamping and repairs of affected plant is in full swing, and we expect the plant to be fully operational by the end of June.

Risks & concerns

  • Caprolactam price volatility and decline

    high

    Caprolactam prices fell consistently by ~$410/ton from March '24 to April '25, leading to inventory losses and margin pressure. Current levels are unviable for producers.

    Management acknowledged

  • Increased imports and dumping from China

    medium

    Imports increased towards the end of Q4 due to lower prices and uncertainty caused by tariff issues, reducing demand from domestic suppliers and impacting margins.

    Management acknowledged

  • Geopolitical challenges

    medium

    Geopolitical challenges, particularly in China, contribute to Caprolactam price instability and could impact NTCF demand and overall competitiveness.

    Management acknowledged

  • Demand slowdown in truck and bus segment

    medium

    Demand for NTCF was substituted during Q4 due to poor demand from the truck and bus segment.

    Management acknowledged

  • Stringent and lengthy approval process for PTCF

    medium

    The approval process for Polyester Tyre Cord Fabric (PTCF) is multi-stage and time-consuming, delaying commercial supplies.

    Management acknowledged

Q&A highlights

7 direct
Impact of fire incident on other expenses and insurance claims Direct
Yes. We had a fire as I mentioned my opening comments in end of February, and we started post our survey by the insurance Company to revamp and restart to repair the damaged machinery. So in this quarter, we have spent about Rs. 8 crores which is part of our other expenses and since the claim has been accepted and the insurance company has given go ahead to make the repairs and maintenance, we also accounted for the insurance claim receivable to the extent of about Rs. 6 crores, which is reflected in our other income.

Clarifies the nature and financial impact of the fire incident, including the one-time expense and expected insurance recovery.

Asked by Vipul Shah

Caprolactam price trends and outlook Direct
So Caprolactam prices have been falling consistently since September. I will give you just quarter-on-quarter number, so that just to give a feel of how fast and the sharp Caprolactam prices are falling. It was 1688 in March end, I am talking in dollars per ton, fell to 1683 in June '24, it was 1623 in September '24. It fell sharply to 1483 in December '24 and again to 1368 in March 25. In fact, it has fallen to about 1278 in April, so it has been falling consistently. Almost $300-$400 is the total gap, almost $400 reduction between March '24 and April '25. And we hope it is close to its bottom, because that is one of the factors which have impacted our financial performance, and such a sharp fall is not conducive to our business model.

Provides detailed historical Caprolactam price data and management's expectation of a bottoming out, which is crucial for margin outlook.

Asked by Vikram Suryavanshi

EBITDA margin for Polyester Tyre Cord Fabric (PTCF) compared to Nylon Tyre Cord Fabric (NTCF) Direct
It will have a similar margin. Only difference is that while our Nylon Tyre Cord, we have already established our quality and we are already serving all the major tyre companies in India. This will go through a process of very detailed approval at each of the tyre Company.

Indicates that the new PTCF product is expected to have similar margins to the existing NTCF, providing clarity on future profitability.

Asked by Vipul Shah

Fungibility of plants between NTCF and PTCF production Partial
Only on the downstream side, the spinning is not fungible. The spinning machines and since the properties and the raw materials are different, so the spinning are different and that is why we have invested in the spinning as well as the downstream. But it is fungible to the extent of the post spinning processes up to the dipping of the fabric and in future, it provides us opportunity to just add spinning and make it more fungible in terms of switching between the capacities of NTCF and PTCF.

Explains the limitations and possibilities of switching production between NTCF and PTCF, highlighting the strategic flexibility for future capacity utilization.

Asked by Vipul Shah

Plans for manufacturing Nylon 66 and its market demand Direct
Yes. So Nylon 66 is similar to Nylon 6, except that particularly on the conversion, which is to make the fabric and to dip it and spinning is slightly more tricky because the raw materials are different and the properties are different. So we are looking at Nylon 66, but our approach would be not to start with the spinning, but start with the imported yarns and convert it into dipped fabric and supply to the customers. And at a later stage, once we establish the product on this route, we could evaluate looking at spinning as an option to backward integrate, but to start with it will be we would want to first establish the product through import of yarns route.

Reveals a potential new product line (Nylon 66) and the company's cautious, phased approach to market entry, starting with imported yarns.

Asked by Dhaval Shah

Frequency of passing on raw material price changes to customers Direct
So in case of reinforcement, it is on a monthly basis. However, monthly also means that there are variations which happen both in terms of stocks in hand as well as the indices. However, in the case of NFY, it is normally we set the price every month looking at the market situations both from imported material as well as the domestic market conditions. So these are also set on a monthly basis, but there is no guaranteed pass through because these depend on the market conditions as well as the imported price that is landing in the domestic market.

Clarifies the pricing strategy for different segments (reinforcement vs. NFY) and the challenges of full pass-through due to market conditions and imports.

Asked by Madhur Rathi

Drag from Polyester Industrial Yarn production in Q4 FY25 Direct
4th Quarter, as I said, we had a breakeven, we didn't have a drag on our operating costs.

Confirms that the production of Polyester Industrial Yarn in Q4 FY25, while awaiting PTCF approvals, did not result in a drag on operating costs, achieving breakeven.

Asked by Amit Kumar

Timeline for PTCF approval process and commercial orders Direct
One is, Polyester Tyre Cord Fabric is slightly new to our team, so there is also a learning part, but more importantly, this is the first time we are getting an approval from the Tyre companies and you know that this is mainly used in the passenger car tyre, so it goes through a very stringent process of approval and since we are supplying for the first time it goes through multiple approvals including making of tyres and running it for thousands of kilometers and then giving us it. There is almost four stage approval that we have to go through and it applies to all producers of Tyre Cord, so it is not unique.

Explains the reasons for the extended approval timeline for PTCF, emphasizing the stringent, multi-stage process required by tire companies for a critical component.

Asked by Amit Kumar

2 min read 6 chapters

Detailed narrative

Q4 FY25 Performance Overview

Century Enka reported a challenging Q4 FY25 with operating revenue declining 5% year-on-year to ₹444 crores. EBITDA for the quarter plummeted by 74% year-on-year to ₹9 crores, resulting in an EBITDA margin of 1.98%. Net profit also saw a significant drop of 67% year-on-year to ₹7 crores, with a PAT margin of 1.53%. Total volume for the quarter, however, showed a modest 1% year-on-year growth to 18,149 metric tons.

Full Year FY25 Performance Highlights

Despite a weak Q4, the full financial year FY25 demonstrated robust growth. Operational revenue increased by 15% year-on-year to ₹2,002 crores. EBITDA grew by 39% year-on-year to ₹115 crores, achieving a margin of 5.73%. Net profit for FY25 surged by 55% year-on-year to ₹66 crores, with a PAT margin of 3.32%. Total volume for the year expanded significantly by 50% year-on-year to 78,425 metric tons, driven by strong performance in the first half.

Raw Material Price Volatility and Impact

Caprolactam prices experienced a consistent and sharp decline, falling from $1688 per ton in March '24 to $1278 per ton in April '25, a reduction of approximately $410 per ton. This sharp fall led to inventory losses and put significant pressure on margins, particularly in Q4. Management noted that current Caprolactam price levels are unviable for producers and expressed hope for a bottoming out soon, as such volatility is detrimental to their business model.

Operational Challenges and Cost Management

A fire incident at the Bharuch plant in February-end necessitated ₹8 crores in repairs and revamping, contributing to higher other expenses in Q4. An insurance claim for ₹6 crores is receivable, partially offsetting the impact. The company continues to focus on operational efficiency, achieving power cost savings of approximately ₹4 per unit compared to grid rates and investing in power reduction equipment with over 25% ROI. Employee costs increased by 4.92%, but management asserts overall control.

Strategic Focus on Value-Added Products and New Capacity

Century Enka is actively increasing its share of value-added products, which currently constitute 25-30% of the NFY topline, with a target to reach 50-60% within the next 2-3 years. Commercial supplies of Polyester Tyre Cord Fabric (PTCF) are expected to commence from Q4 FY26, following a stringent, multi-stage approval process by tire companies. The company aims for a 60% capacity utilization for PTCF to reach breakeven and expects similar margins to its Nylon Tyre Cord Fabric.

Outlook and Future Growth Drivers

For FY26, the company anticipates a volume growth of 5-10%, potentially higher in a favorable scenario or around 5% in an adverse import-heavy scenario. Steady-state EBITDA margins are targeted at 6-8%. Demand for NTCF in FY26 will depend on Indian GDP growth and geopolitical factors. The company is also exploring the potential for Nylon 66 manufacturing, starting with imported yarns and gradually considering backward integration.

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