Century Enka Limited (NSE: CENTENKA) Q1 2026 Earnings Call dated Aug. 04, 2025
Corporate Participants:
Unidentified Speaker
Suresh Sodani — Managing Director
Yogesh Shah — Chief Financial Officer
Analysts:
Unidentified Participant
Deepali Kumari — Analyst
Param Vora — Analyst
Gunit Singh Narang — Analyst
Parth Patel — Analyst
Khushi — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to The Century IncA Q1FY26 earnings conference call hosted by Arihan Capital Markets Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing 0 on your touchtone phone. Please note that this conference has been recorded. I now hand the conference over to Ms. Deepali Kumari. Thank you. And over to you, ma’. Am.
Deepali Kumari — Analyst
Thank you. Hello and good afternoon to everyone. On behalf of Orion Capital Market Limited, I thank you all for joining the FION FY26 funding conference call of Century and Fun Limited today. From the management we have Mr. Suresh Porani, Managing Director and Mr. Yogesh, Chief Financial Officer. So without any further delay, I would like to hand over the call to the management for their opening remarks. Over to you sir.
Suresh Sodani — Managing Director
Everyone and welcome to our earnings conference call for the first quarter of financial year ending 2026. I would like to thank our host Aryan Capital Markets Limited for hosting this call. Now let me first brief you on the operational highlights for the first quarter of FY26. During the quarter, revenue declined compared to the corresponding period of the previous financial year in tire cord fabric segment volumes were impacted due to lower demand from the tire industry and higher imports from China. There was a slowdown in automobile industry particularly in the two wheeler and the commercial vehicle segments due to subdued demand.
However, we expect intensive demand to improve in Q2 following inventory adjustments by tire manufacturers. Second half could witness better demand supported by the festive season and positive impact of favorable monsoon on farm income. Continuing geopolitical and trade tensions along with tariff related uncertainties remain a key risk across the value chain for ptcf. Approval process is currently underway in the filament yarn segment. Sales were impacted by a fire at our Bharuch plant in February 2025. The plant resumed full operations from June 25. Prices remained under pressure due to increased imports from China at lower prices. Our focus continues to be on value added products to improve margins.
On the raw material side. Caprolactium prices continue to decline to record low levels resulting in margin pressure. However, use of renewable energy at Baruch plant help in controlling power cost. We remain focused on improving efficiency of old equipments to stay competitive. I’ll now request our CFO Mr. Yogesh Shah to brief you on financial performance.
Yogesh Shah — Chief Financial Officer
Thank you and good afternoon everyone. Let me now brief you on the Financial Results for the first quarter of the financial year 2026, the operating revenue stood at Rupees 402 crores which declined by almost 24% year on year. Vita for the quarter stood at Rupees 20 crores which declined by 52% year on year. EBITDA margin were reported at 4.96%. Profit after tax was around Rupees 15 crores representing a decrease of almost 37% year on year. PAT margin stood at 3.84% for the quarter. Total volume for Quarter 1 FY26 declined by 17% year on year to 17,072 metric ton tire coat fabrics.
Revenue for Quarter 1 FY26 decreased by around 35% year on year to almost Rupees 181 crores. Filament yarn revenue for the same period also decreased by around 15% year on year to almost rupees 193 crores. With this, we open the floor for questions and answers.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press STAR and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Param Gora from three net asset managers. P. Please proceed.
Param Vora
Thank you for taking a question. And what I wanted to ask was regarding the geopolitical and trade tensions. So how are these factors affecting the company’s operations? Like is it the raw material sourcing or is it the export market?
Suresh Sodani
So our raw material sourcing is not anywhere linked to US markets, however. And we have very little direct exposure of exports to us of our products. However, since our products are used by tariff companies as well as finally other garments which gets exported to US and other countries, we could have an impact if these end products are impacted due to the tariff or other kinds of levies. Due to particularly the differential levies between India and other countries, we still keep a watch on what actually comes out and that is the indirect impact that could be having of the geopolitical situation on our operations.
Param Vora
Okay, and my next question was that you mentioned the volumes of reinforcement yarn was impacted by higher imports from China. So what specific actions are company taking to mitigate the competitive pressure from imports? And are you with any government bodies for any policy interventions?
Suresh Sodani
Yes, through our association we have raised this issue of higher imports from China. And also from the Free Trade Agreement countries where the duty protection is not available. And we have raised this issue in terms of asking. One is for either initiating immediately the QCO process so that first of all, substandard material does not come. And second, only valid and approved sources of importer producers in the other countries are allowed to send material to India. Second, like the government has put the minimum import price on certain finished products. So since our fabric is a finished product and goes directly in consumption for tire manufacturing, we have asked in principle whether they can consider a minimum import price to be put on the tire cot fabrics.
So these two actions are underway and we have started discussions with the government authorities through our associations.
Param Vora
Okay, thank you for my answering my question. I’ll be back in the queue.
operator
Thank you. Before we proceed with the next question, a reminder to the participants that you may press STAR in one in order to ask a question. The next question is from the line of Guneet Singh from Counter Cyclical pms. Please proceed.
Gunit Singh Narang
Hi sir. So our margins, EBITDA margins have fallen from about 13% in FY21 22 to about 5% currently. So I would like to understand what would be the contribution of inventory losses to these margins and do we have any correlation with the price of crude oil on our margins? So I mean price of crude oil have gone down and our input capital prices have also fallen. So I mean out of the 500 basis points, what would be the contribution of inventory losses and under what conditions can we get back to 10% EBITDA margins according to you?
Suresh Sodani
Okay, thank you for your question. One is comparison with 2122 is not necessarily the right comparison because 2122 was a post Covid area where the demand for most of the products had shot up and worldwide as well as in India. So the more likely margins that we commit or we target normally is between 6 to 8%. Yes, our margins are lower than the target between 6% to 8% for this quarter and also for the previous quarters. As regards the impact of falling prices, yes, this do impact our margins because the materials, the stock in hand, right? From raw material to finished goods, the prices get corrected when there is a change in the underlying raw material prices.
We are seeing now hopefully that the raw material prices are close to their bottoms. These are record low levels, almost a fall of $400 from April 24 to June 25. And we are hopeful that these prices should stabilize or improve from these levels. There is a good correlation with crude oil prices because the underlying raw material, I mean the feedstock for our raw materials are crude based. However, it is not a very direct correlation. So sometimes it takes a few quarters or sometimes few months before the correlation starts showing its results. But one more important point is the significant overcapacity that has been created across the value chain, right from raw materials up to the finished products, which has also impacted the margins.
And it is not only in India. These margins have even squeezed in the Chinese domestic market as well.
Gunit Singh Narang
All right, so got it. So going forward, can we expect a 550ci kind of a revenue Runway quarterly? Considering that the fire incident is dying us, is that a fair assumption? And also the new capacity that we’re coming up within Q4, what is the rationale for, I mean increasing capacity when there’s already oversupply and margins are under pressure? So do you see any uptake for that or I mean, what was the rationale for investing in that? And what kind of peak revenues can we expect from the new capacity that will come in Q4?
Suresh Sodani
So we do not give any forward looking data in terms of values of turnover or the bottom line. But volumes will definitely should go up from quarter one because we have restarted our plant which was impacted by fire at Baruch. So those volumes, assuming that the demand does not weaken, should help in overall volume sales volume increase. Second, the top line has a direct correlation with the raw metal prices because normally the prices of finished goods adjust to the raw material prices. And as I said, the basic raw material prices are at record low levels.
So what kind of top line will come as is directly linked to what kind of raw material prices or even the crude prices would prevail in next quarter few quarters. As far as the capacity expansion is concerned, our capacity expansion, which is still not commissioned, is related to polyester tire cord. And the purpose of getting into that segment is that we didn’t have presence in the polyester tire cord which is used in passenger car tire and nylon tire cot is reaching to kind of flat trajectory or very slow growth. Whereas polyester tire cords in line with demand for passenger cars is likely to grow faster than any other reinforcement.
And that is the reason that we got into that and this hopefully should help us gain some more volumes in segments that we are not currently present in. As far as NPCF is concerned, the expansion was mainly for related to the some of the old capacities that we thought is not able to compete with on quality terms with the latest machine. So mainly it was there and there was some balancing capacity increase based on the demand in 22, 23.
Gunit Singh Narang
All right, so looking at the current pricing scenario, I mean realistically what kind of revenues can come from the new CapEx? And also is it a fair assumption that the current EBITDA margins have bottomed out and they cannot go further below what we are experiencing right now. And also can you comment on the current demand scenario? Does it look better than FY25 and what would be the drivers of increase in our margins for the coming quarters or FY26?
Suresh Sodani
Okay, too many questions together so I’ll answer one by one and in case something is left out you can Please repeat your question 1 with respect to the top line that we expect from and that’s based on the normal assumption pricing of the raw materials on from our new capacity it could be between at the full capacity between 100 to 120 crores. And as regards the triggers for margin improvement it is difficult to say whether this is bottom or the best margin because we are the world is in a very volatile situation and as I said in an earlier response we do not have direct exposure to US exports.
But if for example the tire exports were to get impacted or the garment exports were to get impacted then our businesses will also get impacted especially on the volume term. So that is the reason to particularly in current scenario at least for a quarter or two we have to watch how does the tariff issues and the geopolitical challenges play out for the domestic producers and its impact on domestic production going to export market. As regards I guess one of the questions was on can you repeat? I don’t know which one. As I said there are too many questions together.
Anything that is.
Gunit Singh Narang
I mean so I would just like to understand is the current demand scenario or the pricing scenario for our finished goods better than FY25? Or can you just comment on the scenario and outlook for FY26 and also I would like to understand there has been an inventory buildup levels have reached around 315 crores. So what is the reason for that?
Suresh Sodani
Okay, so from demand side we do expect some improvement in demand. I mean difficult to comment for the balance 3/4 in this scenario to say that on an overall basis whether it will be better or worse than FY25 but demand is expected to better as mentioned in our presentation on two factors. One is the festive season normally leads to more demand particularly from farm and two wheeler segments. And secondly since the monsoon has been good and the spread has been good, the farm income has in past been a good driver for demand for the value chain related to automobiles.
So Right from basic automobiles to all tires, everything. So hopefully this should be one reason to look for a better volumes in the coming quarters. But as I said, in a volatile scenario, if this is not supported by the export market because of the tariff, then it could lead to an overall demand reduction. As far as the second question was related to inventory buildup. Inventory? Yeah, so inventory buildup was temporary. So what happens is most of the raw materials are imported and suddenly if the tire companies take an inventory correction, we have to adjust our production so the inventory buildup happens both at raw material and FG state But we are seeing an inventory reduction and hopefully by end of Q2 we should reach to closer to normal inventory level.
Gunit Singh Narang
All right, got it. Thank you very much. I’ll join but thank you.
Suresh Sodani
Thank you.
operator
Thank you. The next question is from the line of path Patel and individual investor. Please proceed.
Parth Patel
Good afternoon. So the first question is that the increase in the capital work in progress suggest that the ongoing capacity expansion and modernization. Can you provide details on these projects, the timelines and expected contribution to top line and for operational efficiency?
Suresh Sodani
Are you talking at the end of FY25 or what period? CWIP25 so most of our projects we have a very small CWIP at the end of February 25th so we have already capitalized most of the value by March 25th already. What now remains is mostly cost reduction and balancing equipment mainly related to energy conservation and some replacement capex. Otherwise the large projects were all most of them were completed by March 25th. As I said, the combined impact is all our cateches at the time of approval have to cross a minimum hurdle rate of at least 10 to 12% or more in return on capital employed or even better in terms of if it is not related to any current operations.
So this is the kind of in a normalized scenario that should be the normal benefits that we should accrue from any capital projects taken except for replacement capex.
Parth Patel
Okay, sir. And also sir, like with the net surplus cash of over like 3.25 billion and improving cash generation what is the capital allocation framework for FY26? Should investors expect higher payout ratios or strategic investments?
Suresh Sodani
The focus is on getting more strategic investments and grow this company. But anyway the payout is more all to be taken out by the board and we can only recommend but at the final and it has already been for the year been given out in terms of the dividend so we can’t comment on what the future would be. But yes, as management we continue to look for opportunities to Grow this company and deliver superior returns on the capital employed.
Parth Patel
Okay sir, thank you.
operator
Thank you. Before we proceed with the next question, a reminder to the participants that you may press Star in one on their touchstone telephone. The next question is from the line of Khushi. An individual investor. Please proceed.
Khushi
What is the pricing strategy in the current Catalactum especially considering that price have fallen multi role. Do you have a pass through mechanism in deals with key tests?
Suresh Sodani
Yes, in case of tire cot fabric there is a pass through mechanism for the raw material prices and that has been continuing for many years in past and continues in the current year as well. As far as the filament yarn is concerned, ultimately there is a pass through but it may not be in terms of timelines or in terms of quantum because it is also a function of the demand supply and the imports coming in from China. So that is one area which always remains as a area which is not completely in a pass through mechanism.
It could be sometimes a gainful scenario. It could sometimes be less than the full pass through.
Khushi
Okay. All right,
operator
thank you. Ladies and gentlemen, in order to ask a question please press Star in one. I would request participants to press Star in one in order to ask a question. We take the next question from the line of path, Patel and individual investor. Please proceed.
Parth Patel
One final question. The post resumption of operations at the Baruch plant in June. What is the current run rate of filament production and how long before you expect full stabilization of volumes or nothing?
Suresh Sodani
So we have fully commissioned the the impacted plant by June end and we are I mean technically the full capacity of available but based on the demand supply and stock positions, we do adjust our production so it is operating at 90 plus 95 plus capacities. If an impacted plant is already working at that level and with better demand scenario from particularly from the coming festive season, we expect it to run at full capacity.
Parth Patel
Okay sir, thank you.
operator
Thank you. Ladies and gentlemen, in order to ask a question please press Star in one. The next question is from the line of Khushi. An individual investor. Please proceed.
Khushi
Has there been any tangible recovery in demand from OEMs or the replacement market in Q2 so far, particularly in the two wheeler and commercial vehicle segment.
Suresh Sodani
We get the impact on OEMs or only through what kind of order position comes from the tire company so difficult to commit. I mean we are just in the first month of Q2. But as I said we are hopeful of improvement because tire companies have taken inventory corrections in the Q1 and hence the volume requirement from the domestic Suppliers was reduced. Hopefully that correction has been done and the Q2 numbers. At least demand coming from tire companies should improve under the overall protects that the export market would not get impacted.
Khushi
Okay, got it. Thank you.
operator
Thank you. We take the next question from the line of Guneet singh from countercyclical PMS. Please proceed. I would request Mr. Guni to unmute herself and then speak.
Gunit Singh Narang
Hi sir. So thank you for giving me this opportunity again. So I would just like to understand the demand supply scenario in India currently. So total supply and total demand. And also how different are our prices from the imports from China?
Suresh Sodani
So NTCF demand fluctuates for between 125 to 135kt, sometimes even slightly. I mean plus minus 5kt on an annualized basis but could vary significantly on a quarter to quarter basis is mainly because of changes in the replacement demand position. It is the NTCF is not, I mean falling significantly but also not growing, so more or less flat. We do expect a small increase driven by the farm segment and the two three wheeler segment, but that should be the range in which it should be there. The PTCF demand is about 30-35 kg. Again this is annualized demand and that is expected to grow by 6 to 8% on the premise that the car industry and the four wheeler industry particularly is doing well and should continue to do well even though the last few quarters have been not that great.
But looking at the overall penetration ratio being so low, it should grow in future at this rate. That’s the projection that we get from the industry. And in terms of nfy, the demand, I mean there is no clear numbers because of the wide variety of NFY that is there. But it is anything between 160 to 180kt. But it is also growing at about 68% based on changes in the end use segments of NFI. Mainly from the fashion side.
Gunit Singh Narang
What is the domestic capacity for each of these?
Suresh Sodani
NTCF is almost matching this capacity and about 20% comes for imports which is mainly for the export of tires. So it comes under advanced license. So to that extent the domestic capacity remains underutilized. PTCF is about 20% or 25% of the total demand including the new capacities which have come up, including our. I mean which is not necessarily a commercial capacity in terms of since its approval is going on. And in NFY the capacity is over 200kt and that is the normal growth, I mean utilization ranging from between 65 to about 85 depending on the season.
And depending on the demand supply or import from China.
Gunit Singh Narang
All right, and sir, what is the differential pricing as compared to Chinese imports?
Suresh Sodani
So on with the duty paid it is almost matching. There could be few because the pricing is also an annualized pricing formula based so on quarter, on quarter it could be different. But normally the pricing is closer to or similar to the duty paid pricing coming from China.
Gunit Singh Narang
All right, so sir, given that there’s an oversupply scenario in the domestic market, do we have any competitors place shutting down their plants or moving out of the business? And I mean given the current scenario, what would be the drivers of growth for our company for the coming two to three years? Would we try to get into other businesses or I mean where do you see the company coming two to three years?
Suresh Sodani
So for us, particularly in nfi, we will be looking at only increasing our value added products the way we have done for last few years. And that is something which has held us against a very high price intensity competition from China because that’s where the different we have been able to differentiate our products in the market compared to more bulk products coming from China. In ptcf, as I’ve already explained, we are looking at growth in ntcf. The focus is on improving our efficiencies to while the pricing would remain more challenging. But what is the improvement that we can do? And we have taken a lot of steps to improve our efficiencies, our consumption ratios also by replacing some of the inefficient equipment and that would continue in future.
The growth would one come from our PTCF expansion. But also we’ll explore other avenues. The way we have diversified into PTCF, into other kinds of technical textiles which are under evaluation. And once we have clarity and that and we are ready to announce through normal mechanisms of informing, through the board approval and post informing to the stock exchanges. It will also be known to all.
Gunit Singh Narang
Of you, sir, what should be the EBITDA margin range for pdcf?
Suresh Sodani
Similar. I mean when we say similar for the company, between 6 to 8%.
Gunit Singh Narang
All right. Are we seeing any pressure in the industry, Any plant shutdowns by competitors.
Suresh Sodani
In nfi? Yes, there have been some. I mean not in immediate part, but last year and previous year some of the inefficient players and some players who are possibly more indebted had to shut down. But there is also growth. A lot of people are making some new investments as well. And we have also made investments particularly for the value added products. And that trend I think will go forward. Go on as in future as well.
Gunit Singh Narang
All right, so if we look at the past 15, 20 years, can we say that we are currently at the bottom of the business cycle? And I mean things should turn maybe only in the positive side because we are already at the bottom. Is that a fair assumption given your experience?
Suresh Sodani
If there were no geopolitical and other challenges, I would have possibly given you a positive or response. But very difficult to say in this scenario because, you know, there are so many uncertainties and so much. It’s not only for India, it is also for China, for Southeast Asia. So too difficult to say whether what kind of cycle we are in. But what we are trying to do is work on what is in our control and remain competitive and to deliver sustainable growth and profits.
Gunit Singh Narang
And do we face any risk when it comes to sourcing raw materials? Where do we source majority of our raw materials from?
Suresh Sodani
We source from multiple countries and we don’t see any significant risk because like other products, raw material is also available in multiple. I mean abundantly. Abundantly. So we don’t see any risk. And we continue to source from our two sources in India as well and we meet them, I mean interact with them regularly and they would continue to operate. There is no chance of these suppliers getting or closing down. So we don’t see any significant risk in the raw material availability or the pricing side.
Gunit Singh Narang
All right, sir, Got it. Thank you very much for answering all my questions. Wish you all the best.
Suresh Sodani
Thank you.
operator
Thank you. A reminder to the participants that you may press Star in one in order to ask a question. As there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments.
Yogesh Shah
Thank you everyone for joining our earning call. I hope we were able to give the answer to your queries and I hope those were to your satisfaction. If you have any further question or would like to know more about the company, please reach out to our investor relation manager at Belaram Advisors. Thank you.
operator
Thank you. On behalf of arian Capital Markets Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your lines. It.