Summary
Century Enka Limited - Q3 FY26 Earnings Call Summary Monday, February 9, 2026, 11:00 AM
Event Participants
Executives 2 Suresh Sodani (Managing Director), Yogesh Shah (Chief Financial Officer)
Analysts 7 Danish (Individual Investor), J Jain (Individual Investor), Kamal Jeswani (U First Capital), Krupa Kamdar (Individual Investor), Moksh Ranka (Aurum Capital), Vijay Subramaniam (Trustline India), Vipulkumar Shah (Sumangal Investments)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Operating Revenue | ₹412 crores | -17% YoY, +1% QoQ; impacted by volume decline in NTCF and weak filament yarn demand. |
| EBITDA | ₹41 crores | +50% YoY, +29% QoQ; improvement driven by operational efficiency and VAP contributions. |
| EBITDA Margin | 9.93% | +442 bps YoY, +220 bps bps QoQ; significant expansion due to efficiency and lower power costs. |
| Profit After Tax (PAT) | ₹24 crores | +69% YoY, +6% QoQ; growth achieved despite an exceptional item of ₹3.7 crores. |
| PAT Margin | 5.76% | Reflects improved operational profitability offset by new labor code impacts. |
| Total Sales Volume | 52,981 metric tons | -12% YoY (9M); NTCF demand was subdued in the first half of the year. |
| Segment: Tyre Cord | ₹571 crores (9M) | -24% YoY; volumes impacted by trade waiting for GST cuts, though Q3 saw recovery. |
| Segment: Filament Yarn | ₹599 crores (9M) | -19% YoY; affected by extended monsoons and labor shortages in Surat. |
Geographic & Segment Commentary
- Tyre Cord Fabric (NTCF): Demand improved in Q3 following GST cuts on tyres and automobiles, with management expecting further recovery in Q4. However, margins remain pressured by low-priced Chinese imports and duty-free FTA imports. The segment is transitioning towards Polyester Tyre Cord Fabric (PTCF), with regular commercial sales slated for FY27.
- Nylon Filament Yarn: Revenue was impacted by a weak post-festive season and labor migration during Bihar elections, which affected Surat fabric production. Strategic focus on Mother Yarn and Value-Added Products (VAP) helped sustain margins against heavy Chinese dumping (imports up 50-70%). Management expects a seasonal uptick in Q4 due to the marriage and summer seasons.
Company-Specific & Strategic Commentary
- Polyester Tyre Cord Fabric (PTCF) Expansion: Management is navigating a rigorous approval process with tyre OEMs for PTCF, targeting the growing passenger car radial market. Regular commercial sales are expected to begin in FY27, with potential capacity scaling under evaluation based on market stabilization.
- Operational Efficiency & Power: Renewable energy currently meets 15% of power requirements at the Bharuch plant. Phase II commissioning in late FY27 will increase this to 30-35%, expected to result in annualized savings of ₹10-12 crores by FY28.
- Anti-Dumping Duties: The industry has filed for anti-dumping duties on Chinese imports; the DGTR ruling is expected by March 2025. Final implementation remains subject to Finance Ministry notification.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Volume Growth | Improved Q4 FY26 | Management expects Q4 volumes to exceed Q3 levels for both segments due to GST benefits and seasonality. |
| PTCF Commercialization | FY2027 | Regular commercial sales for the new polyester segment are expected to stabilize next year. |
| Renewable Energy | 30-35% of mix by FY27 | Second phase of renewable capacity to be commissioned in late FY27 to reduce power costs. |
| Capex Strategy | Growth-focused (12% IRR) | Focus on VAP and technical textiles; no further expansion planned for Nylon Tyre Cord. |
Risks & Constraints
| Risk | Context |
|---|---|
| Cheap Imports & Dumping | Nylon filament yarn imports from China have increased 50-70% YoY due to weak Chinese domestic demand and US tariffs. This puts sustained pressure on domestic commodity margins. |
| Raw Material Volatility | Caprolactam prices rose in Oct-Jan following production cuts in China and crude oil spikes. While the company operates on a pass-through basis, rapid price movements can cause temporary timing lags in margin recovery. |
| OEM Approval Cycles | The PTCF segment faces long gestation periods as tyre companies conduct extensive road testing for single-ply passenger car applications. Any delay in these audits could postpone revenue shifts. |
Q&A Highlights
Dumping and Anti-Dumping Duty
- Question: What is the status of the anti-dumping duty on Chinese imports? (Moksh Ranka)
- Answer: The DGTR ruling was extended to March 2025; we expect a positive recommendation this quarter, which then moves to the Finance Ministry for final notification (Suresh Sodani).
GST Impact and Volume Recovery
- Question: How much did volumes jump post-GST cuts? (Vipulkumar Shah)
- Answer: Improvement was primarily in reinforcements (tyre cord) as the trade was waiting for the August announcement to be implemented. We expect this recovery to be more visible in Q4 (Suresh Sodani).
PTCF Strategy
- Question: What are the EBITDA expectations for the new PTCF segment? (Danish)
- Answer: We target a minimum internal threshold of 12% IRR for new projects; margins should be similar to existing reinforcement segments once commercial supply stabilizes (Suresh Sodani).
Capital Allocation
- Question: Is there a possibility of a buyback given the cash on the balance sheet? (Vijay Subramaniam)
- Answer: The board is aware of investor views, but management’s priority is deploying cash into high-growth projects that provide sustainable profitability (Suresh Sodani).
Key Takeaway
Century Enka reported a resilient Q3 FY26, with EBITDA growing 50% YoY to ₹41 crores and margins expanding to 9.93% despite a 17% decline in revenue. The performance was bolstered by manufacturing efficiencies, increased use of renewable energy (15% mix), and a pivot toward value-added products in the nylon filament yarn segment. While volumes were historically lower due to delayed monsoons and pre-GST trade stagnation, management noted a significant demand recovery in the reinforcement segment post-tax cuts. Strategically, the company is focused on the FY27 commercialization of Polyester Tyre Cord Fabric (PTCF) and increasing its renewable energy footprint to 35% to drive ₹10-12 crores in annual savings. Key monitorables remain the final notification of anti-dumping duties on Chinese imports and the stabilization of caprolactam prices. Management maintains a debt-free balance sheet and expects Q4 FY26 to show sequential volume improvement as seasonal demand peaks.
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