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Century Enka Limited — Q4 FY26 earnings call

Call held 22 May 2026

Management summary

Century Enka delivered a strong Q4 FY26, marked by robust revenue and profit growth, driven by higher sales volumes and effective pass-through of raw material costs. While the full fiscal year saw a decline in revenue and volume, profitability improved significantly. The company is strategically investing in CAPEX for value-added products, renewable energy, and efficiency improvements, with commercial sales for Polyester Tire Cord Fabric (PTCF) expected in H2 FY27. Management remains focused on growth and sustainability amidst geopolitical uncertainties and raw material price volatility.

Highlights

Operating revenue for Q4 FY26 stood at ₹484 crores, registering a growth of 9% year-on-year and a strong sequential growth of 17% quarter-on-quarter.
EBITDA for Q4 FY26 stood at ₹55 crores, reflecting a sharp increase of 530% year-on-year and a robust growth of 36% quarter-on-quarter.
PAT for Q4 FY26 stood at around ₹39 crores, registering a substantial growth of 479% year-on-year and 66% quarter-on-quarter.
Total volume for Q4 FY26 grew strongly by 14% year-on-year to 20,711 metric ton, driven by reinforcement sales increasing 21% to ₹245 crores.
For FY26, EBITDA registered a healthy growth of 29% year-on-year to ₹148 crores, with EBITDA margin improving significantly to 8.67%, reflecting an expansion of 294 basis points.

Concerns

For the Financial Year 2026, operating revenue stood at ₹1,705 crores, reflecting a decline of 15% year-on-year.
Total volume for FY26 stood at 73,692 metric tons, reflecting a degrowth of 6% year-on-year.
Chinese imports at very low prices persist in commodity products, posing a challenge despite a favorable anti-dumping ruling.

Key financials

2 periods

Q4 FY26

Operating Revenue
₹484 Cr
YoY +9% QoQ +17%
EBITDA
₹55 Cr
YoY +530% QoQ +36%
EBITDA Margin
11.5%
YoY +9.5% QoQ +1.5%
PAT
₹39 Cr
YoY +479% QoQ +66%
PAT Margin
8.2%
YoY +6.6% QoQ +2.4%
Total Volume
20,711 metric ton
YoY +14%

FY26

Operating Revenue
₹1,705 Cr
YoY -15%
EBITDA
₹148 Cr
YoY +29%
EBITDA Margin
8.7%
YoY +2.9%
Net Profit
₹101 Cr
YoY +52%
PAT Margin
5.9%
YoY +2.6%
Total Volume
73,692 metric tons
YoY -6%

What they filed

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

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	536	493	444	402	409 −24%	412 −16%	484 +9%	554 +38%
Expenses	498	466	435	382	377	371	428	469
EBITDA	38	27	9	20	32 −16%	41 +52%	55 +511%	86 +330%
Margin	7%	5%	2%	5%	8%	10%	11%	15%
Other income	7	7	15	14	8	5	13	8
Interest	1	1	1	1	1	1	1	0
Depreciation	14	14	14	14	14	14	15	14
Profit before tax	30	19	9	19	26 −13%	32 +68%	53 +489%	79 +316%
Tax rate	28%	24%	27%	19%	12%	25%	25%	23%
Net profit	22	14	7	15	23 +5%	24 +71%	40 +471%	61 +307%
EPS	9.87	6.56	3.16	7.02	10.32	10.92	18.26	28.06

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 Revenue (Q4 FY26)

₹474 Cr Total

Reinforcement Sales ₹245 Cr 51.7%
Filament Yarn Sales ₹229 Cr 48.3%

Capital allocation

high confidence

Capex ₹100 Cr
- Equity contribution for renewable energy (26% stake in group captive arrangement) ₹10 Cr
- Value-added products, Mother Yarn project capacity expansion, power consumption reduction, waste reduction, fire safety reconfiguration ₹100 Cr
Suresh Sodani: "So, for renewable energy, we participate through a third-party group captive arrangement. We contribute only to 26% of the equity of the project. That amount is very small. It would be less than under Rs. 10 crores in total..." and "As far as other projects are concerned, we are expecting a total CAPEX outlay of over Rs. 100 crores, primarily going into value-added products, expansion of Mother Yarn project capacity, and also for various reduction of our power consumption as well as reduction of waste for improvement of our operating margins and efficiency."
Liquidity Liquidity disclosed Company has a significant balance in investments, about more than Rs. 400 crores, which the Board intends to utilize for growth of the business in current and possibly new segments.

Jiten Parmar: "And we have significant balance basically in investments, about more than Rs. 400 crores. Now, if the CAPEX is only Rs. 100 crores, has the Board thought about doing something with that cash, basically maybe buyback or you enhance dividend."

Guidance & targets

Profitability

Operating Margin Band Profitability · Normalized scenario · Medium confidence 7% to 10%

See, I mean, we have been normally talking of an operating margin of about 6% to 8%. But given our focus on reducing cost and also reducing our power rates through hybrid power and renewable power, we now feel that depending on the external scenarios and demand, our operating margin could be in the range of 7% to 10%.

— Suresh Sodani
Additional Margin from Value-Added Products Profitability · Average · High confidence about 20%

Since we report all, I mean, in a single segment, I will not be able to give volumes, but on an average, about 20% additional margin we realize after the additional cost that we do in converting these into value-added products.

— Suresh Sodani

Capacity

Renewable Energy Content in Power Consumption Capacity · Post commissioning of additional renewable power · High confidence about 48%

From 36% today

I can give you an estimate of our current, for the FY '26, our renewable content on the total power consumption was about 36%. Post our commissioning of additional renewable power, it should go up to about 48%.

— Suresh Sodani
Polyester Tire Cord Capacity Capacity · Current · High confidence 4 KT per annum

So, as I mentioned, our current capacity is about 4 KT, 4,000 tons per annum.

— Suresh Sodani
Polyester Tire Cord Capacity Increase from FY27 CAPEX Capacity · Post FY27 CAPEX · High confidence 2 to 2.5 KT

So, capacity would go up by about 2 to 2.5 KT, you can say, for the project that would get commissioned.

— Suresh Sodani

Sales

PTCF Commercial Sales Commencement Sales · FY '27 · High confidence FY '27

Meanwhile, PTCF approval process moved to the next stage, with commercial sales expected from FY '27.

— Suresh Sodani
PTCF Commercial Sales Commencement (Specific) Sales · H2 FY27 · High confidence second half of FY '27

We are hopeful that the commercial sales would start in FY '27, most likely second half of FY '27.

— Suresh Sodani
Exports as Percentage of Total Revenue Sales · Current · High confidence 4% to 5%

That is about 4% to 5% is our exports, but we are focusing on increasing our exports particularly of the value-added filament yarn.

— Suresh Sodani

Capex

Total CAPEX Outlay Capex · FY '27 · High confidence over Rs. 100 crores

As far as other projects are concerned, we are expecting a total CAPEX outlay of over Rs. 100 crores, primarily going into value-added products, expansion of Mother Yarn project capacity, and also for various reduction of our power consumption as well as reduction of waste for improvement of our operating margins and efficiency.

— Suresh Sodani

Market Share

Domestic Demand from Imports (Nylon Filament Yarn) Market Share · Aggregate basis · High confidence 20% to 25%

Currently, on an aggregate basis, about between 20% to 25% of domestic demand is being made from imports.

— Suresh Sodani

Pricing

Anti-Dumping Duty Impact on FOB Value Pricing · Post notification · Medium confidence 10% to 30%

So, what has come out as a notification talks of between about 70 cents to, I mean, depending on the product and the country, it is varying from about 20 cents to 80 cents. So, it will have a multiple, I mean, so, it is fair to assume that it is about between 10% to 30% of current FOB value and that could be the impact on the prices.

— Suresh Sodani

Volume

Overall Growth of Nylon as Reinforcement in Tire Segment Volume · Marginal growth · Medium confidence 1% to 2%

We expect only marginal growth of maximum 1% to 2%.

— Suresh Sodani

What to watch in Q1 FY27

PTCF Commercial Sales Commencement

H2 FY27

Current Approval process ongoing, commercial sales expected H2 FY27

Target Commencement of commercial sales

Why it matters

This is a key new product entry for which significant CAPEX has already been invested, crucial for future revenue diversification and growth.

Suresh Sodani: "We are hopeful that the commercial sales would start in FY '27, most likely second half of FY '27."

Risks & concerns

Geopolitical situations, elevated crude oil prices, and persistent inflation
medium

Management remains cautiously optimistic about demand growth in coming quarters despite these continuously changing external factors.

Management acknowledged
Chinese imports at very low prices in commodity products
medium

Chinese imports persist, but DGTR has issued a favorable anti-dumping ruling, with final notification from the Finance Ministry awaited.

Management acknowledged
Raw material price volatility (e.g., caprolactum prices post-Iran conflict)
medium

Sharp increases in raw material prices were effectively passed through by transparent discussions with customers, and production cuts were avoided.

Management acknowledged
Radialization in the tire segment impacting nylon demand
low

Radialization has moved to about 60% in the truck and bus segment but does not impact tractor or two-wheeler segments. Overall nylon reinforcement growth in tires is expected to be marginal (1-2%).

Management downplayed

Q&A highlights

6 direct, 1 evasive

CAPEX Budget for FY27/FY28 including renewable energy and PTCS scale-up Direct

So, for renewable energy, we participate through a third-party group captive arrangement. We contribute only to 26% of the equity of the project. That amount is very small. It would be less than under Rs. 10 crores in total... As far as other projects are concerned, we are expecting a total CAPEX outlay of over Rs. 100 crores, primarily going into value-added products, expansion of Mother Yarn project capacity, and also for various reduction of our power consumption as well as reduction of waste for improvement of our operating margins and efficiency.

Provides specific CAPEX figures and strategic allocation for future growth, efficiency, and new projects.

Asked by Krishna Modi

Breakdown of EBITDA margins between inventory gains and volumes Partial

We will not be able to give that break-up because of competitive reasons, but the reason for mentioning that is that our focus is always on reducing inventory in a highly volatile situation, particularly in NFY segment where the prices correct more on the spot prices of raw materials.

Management declines to provide specific breakdown, indicating sensitivity around margin drivers, but highlights inventory management as a key focus.

Asked by Jiten Parmar

Utilization of cash balance for shareholder value (buyback/dividend) versus CAPEX Direct

So, I mean, the discussions at the Board are mainly at growth and we intend to utilize this cash for growth of the business in current and possibly also into the new segments. It could be within textiles or otherwise also.

Clarifies management's capital allocation philosophy, prioritizing growth and business sustainability over immediate shareholder returns like buybacks or higher dividends.

Asked by Jiten Parmar

Margin expectations for H2 FY27 Evasive

We do not give any forward-looking statements in terms of margins or business results, but yes, this will definitely reduce our power rates. But including the demand and geopolitical situation, anyway, it has become more a quarter-on-quarter kind of planning, because the entire situation has become extremely volatile because of more external factors, which are mostly out of our control.

Management avoids specific margin guidance due to volatility but indicates power cost reduction will be a positive factor.

Asked by Krishna Modi

Impact of higher raw material prices on Q1 FY27 margins Direct

Yes, that will happen. So, margin will be under pressure in this quarter. I am not asking for numbers. I am asking for directional view, sir. See, I mean, we have been normally talking of an operating margin of about 6% to 8%. But given our focus on reducing cost and also reducing our power rates through hybrid power and renewable power, we now feel that depending on the external scenarios and demand, our operating margin could be in the range of 7% to 10%.

Management acknowledges near-term margin pressure due to higher inventory costs but maintains an optimistic long-term outlook for operating margins (7-10%) due to cost reduction initiatives.

Asked by Vipulkumar Shah

Progress and commercialization timeline for Polyester Tire Cord Fabric (PTCF) Direct

This is already operational. So, we are currently manufacturing and selling polyester industrial yarn. But the main purpose of putting up this facility was to manufacture polyester tire cord fabric... We are hopeful that the commercial sales would start in FY '27, most likely second half of FY '27.

Provides clarity on the status of a key new product, its rigorous approval process, and the expected timeline for commercial sales.

Asked by Maitri Shah

Percentage of sales from value-added products and their margin differential Direct

Since we report all, I mean, in a single segment, I will not be able to give volumes, but on an average, about 20% additional margin we realize after the additional cost that we do in converting these into value-added products.

Offers insight into the company's product strategy, indicating that value-added products provide a significant margin uplift (20% additional margin) compared to commodity products.

Asked by Maitri Shah

Impact of anti-dumping duty on Nylon Filament Yarn (NFY) on realizations and import quantum Direct

Currently, on an aggregate basis, about between 20% to 25% of domestic demand is being made from imports... So, it is fair to assume that it is about between 10% to 30% of current FOB value and that could be the impact on the prices.

Highlights the potential positive impact of the anti-dumping duty on pricing and competitiveness against Chinese imports, which currently constitute a significant portion of domestic demand.

Asked by Chandresh Malpani

3 min read 6 chapters

Detailed narrative

Robust Q4 FY26 Performance Driven by Volume and Cost Pass-Through

Century Enka reported a strong Q4 FY26, with operating revenue growing 9% year-on-year to ₹484 crores and a 17% sequential growth. EBITDA surged 530% year-on-year to ₹55 crores, leading to an EBITDA margin of 11.46%, an expansion of 948 basis points. This performance was primarily fueled by a 14% year-on-year increase in total volume to 20,711 metric tons and the effective pass-through of raw material cost increases, particularly in the Tire Cord business which saw robust demand from tractor and two-wheeler segments.

FY26 Overview and Profitability Improvement

For the full fiscal year 2026, Century Enka's operating revenue declined 15% year-on-year to ₹1,705 crores, and total volume saw a 6% degrowth to 73,692 metric tons. Despite the top-line contraction, the company achieved a healthy 29% year-on-year growth in EBITDA to ₹148 crores, with the EBITDA margin expanding by 294 basis points to 8.67%. Net profit for FY26 also grew significantly by 52% year-on-year to ₹101 crores, resulting in a PAT margin of 5.91%.

Strategic CAPEX for Growth, Efficiency, and New Products

The company plans a CAPEX outlay of over ₹100 crores for FY27, earmarked for value-added products, expansion of Mother Yarn capacity, and initiatives to reduce power consumption and waste. Additionally, an equity contribution of less than ₹10 crores is planned for renewable energy expansion through a group captive arrangement, aiming to increase renewable power content from 36% to 48%. The Polyester Tire Cord Fabric (PTCF) project, which has already seen an investment of close to ₹100 crores, is undergoing a rigorous approval process, with commercial sales expected in H2 FY27.

Managing Raw Material Volatility and Chinese Import Competition

Century Enka successfully navigated sharp increases in caprolactum prices following the Iran conflict by effectively passing these costs through to customers. While Chinese imports at very low prices continue to affect commodity products, the company is encouraged by a favorable anti-dumping ruling from DGTR. Awaiting final notification from the Finance Ministry, this ruling could potentially impact pricing by 10-30% of current FOB value, improving competitiveness against imports which constitute 20-25% of domestic demand.

Capital Allocation Focused on Growth and Sustainability

Management reiterated its capital allocation philosophy, emphasizing growth and long-term business sustainability over immediate shareholder returns like buybacks or higher dividends. The Board intends to utilize the company's significant balance in investments, exceeding ₹400 crores, for strategic growth initiatives, including exploring new segments within or outside textiles, and making investments to reduce costs and improve operational efficiency.

Outlook on Operating Margins and Radialization Impact

In a normalized scenario, Century Enka anticipates its operating margin to be in the range of 7% to 10%, driven by ongoing cost reduction efforts and increased renewable energy usage. Regarding radialization in the tire segment, management noted that it has reached approximately 60% in the truck and bus segment but does not significantly impact the tractor or two-wheeler segments. The overall growth of nylon as reinforcement in the tire segment is expected to be marginal, around 1% to 2%.

This is an AI-generated summary of a publicly available earnings call transcript.

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