CENTENKA - Century Enka

📊 NSE: CENTENKA 🏢 Textiles - Manmade 📅 Last Updated: 12/13/2025 20:49

💰 Financial Performance

Revenue Growth by Segment

In Q2 FY26, operating revenue of INR 409 Cr declined 24% YoY but grew 2% QoQ. For H1 FY26, revenue of INR 810 Cr was down 24% YoY. FY 2024-25 net revenue was INR 2,001.69 Cr, up 15% YoY from INR 1,744.15 Cr, driven by higher volumes in Nylon Tyre Cord Fabric (NTCF) and Nylon Filament Yarn (NFY).

Profitability Margins

Operating margins have been volatile: 12.7% in FY22, 6.9% in FY23, and 4.9% in FY24. For 9M FY25, margins improved to 6.8% due to sustained demand in the farm tyre segment. Q2 FY26 PAT margin was 5.46% on a profit of INR 22 Cr.

EBITDA Margin

Q2 FY26 EBITDA margin was 7.73% (EBITDA of INR 32 Cr), which declined 17% YoY but improved 59% QoQ. H1 FY26 EBITDA margin stood at 6.37% (EBITDA of INR 52 Cr), down 35% YoY.

Capital Expenditure

The company planned INR 30-35 Cr for value-added products in the NFY segment. Over the last three years, approximately INR 50 Cr has been invested in value-added products to shift away from low-margin commodity business.

Credit Rating & Borrowing

CRISIL maintains a 'Stable' outlook with a healthy financial risk profile. Interest coverage ratio was 21x as of March 31, 2024, and gearing was exceptionally low at 0.04 times. Annual debt obligations are approximately INR 15 Cr.

⚙️ Operational Drivers

Raw Materials

Caprolactam is the primary raw material, which is highly volatile and significantly impacts operating margins.

Capacity Expansion

Current focus is on value-added NFY products, with a target to have these exceed 50% of volume in 2-3 years. Entry into the Polyester Tyre Cord Fabric (PTCF) segment is expected to contribute starting FY27.

Raw Material Costs

Raw material volatility (Caprolactam) led to a margin decline from 12.7% in FY22 to 4.9% in FY24. Procurement strategies focus on offsetting margin pressure through product diversification.

📈 Strategic Growth

Expected Growth Rate

Growth Strategy

Growth will be achieved by expanding into the Polyester Tyre Cord Fabric (PTCF) segment by FY27, increasing the share of value-added Nylon Filament Yarn (NFY) to over 50% of volume, and deploying surplus cash of INR 368 Cr into new projects and verticals.

Products & Services

Nylon Tyre Cord Fabric (NTCF), Nylon Filament Yarn (NFY), and Polyester Tyre Cord Fabric (PTCF).

Brand Portfolio

Century Enka.

New Products/Services

Polyester Tyre Cord Fabric (PTCF) is the major new product launch expected to contribute to revenue starting in fiscal 2027.

Market Expansion

The company is exploring new segments and verticals to deploy its surplus cash position of INR 368 Cr.

Market Share & Ranking

Century Enka holds a 25% market share in the NTCF segment and is among the top three manufacturers in India.

Strategic Alliances

Established in 1965 as a collaboration between the BK Birla group and Enka International (part of Akzo Nobel).

🌍 External Factors

Industry Trends

The industry is seeing a major shift toward radialization in tyres, which disrupts the traditional NTCF market. The company is positioning itself by diversifying into polyester-based fabrics (PTCF).

Competitive Landscape

Competes with two other major domestic manufacturers and faces significant pressure from the unorganized market and Chinese imports.

Competitive Moat

Moat is built on a 25% market share in NTCF, backward integrated manufacturing, and strong financial flexibility with INR 368 Cr in cash and equivalents.

Macro Economic Sensitivity

High sensitivity to the tyre industry, which is expected to grow at high single-digit levels, and demand for two/three-wheelers and farm equipment.

Consumer Behavior

Shift in consumer preference toward radial tyres for better fuel efficiency and longevity is reducing the addressable market for NTCF.

Geopolitical Risks

Cheaper imports from China are a significant geopolitical and trade risk, impacting domestic volumes and pricing structures.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to pollution norms and import/export regulations, particularly those related to synthetic fiber manufacturing and chemical handling.

Environmental Compliance

The company was voluntarily assigned an ESG rating of 60 (Category: Average) by CFC Finlease Private Limited.

Taxation Policy Impact

The effective tax rate for FY25 was approximately 27.5% (INR 25.47 Cr tax on INR 92.57 Cr PBT).

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the pace of radialization in the tyre industry, which could reduce NTCF demand by more than expected. Caprolactam price volatility remains a constant margin risk.