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    Century Enka

    CENTENKA
    Textiles·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

    5

    • 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

    5

    • 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

    Metrics

    12

    Periods

    2

    Q4 FY25

    6
    • Operating Revenue
      ₹444 Cr
      YoY-5%
    • EBITDA
      ₹9 Cr
      YoY-74%
    • EBITDA Margin
      2.0%
    • PAT
      ₹7 Cr
      YoY-67%
    • PAT Margin
      1.5%

    FY25

    6
    • Operational Revenue
      ₹2,002 Cr
      YoY+15%
    • EBITDA
      ₹115 Cr
      YoY+39%
    • EBITDA Margin
      5.7%
    • Net Profit
      ₹66 Cr
      YoY+55.0%
    • PAT Margin
      3.3%

    Segment breakdown

    • Tyre Cord Fabric₹203 Cr47.7%
    • Filament Yarn₹223 Cr52.3%
    Donut· Share of Q4 FY25 Revenue

    Capital allocation

    1
    medium confidence
    CategoryHeadline
    Capex

    Capex disclosed

    Guidance & targets

    6
    CategoryTargetPriority
    Capacity
    Affected plant operational status
    Fully operational
    		High
    Commercial Operations
    Polyester Tyre Cord Fabric (PTCF) commercial supplies start
    Start from Q4 FY26
    		High
    Product Mix
    Share of value-added products in NFY topline
    50%-60%
    		Medium
    Profitability
    Operating EBITDA margin (steady state)
    6%-8%
    		Medium
    Volume
    Volume growth
    5%-10%
    		Medium
    Capacity Utilization
    PTCF capacity utilization for breakeven
    60%
    		High

    Bharuch plant operational status

    End of June
    CurrentRevamping and repairs in full swing
    TargetFully 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.

    How to verify

    capital_allocation.capex.purposes[description='Repairs and revamping of plant and equipment damaged by fire']

    Risks & concerns

    5
    RiskSeverity

    Caprolactam price volatility and decline

    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

    high

    Increased imports and dumping from China

    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

    medium

    Geopolitical challenges

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

    medium

    Demand slowdown in truck and bus segment

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

    medium

    Stringent and lengthy approval process for PTCF

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

    medium

    Q&A highlights

    8

    “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

    2 min read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.