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Century Enka Ltd.: Should you invest?

March 4, 2022
in Stocks
century

About the company: Century Enka Ltd.

  1. Century Enka Ltd was founded in 1965 as a result of Mr. B.K. Birla’s (grandfather of Kumar Mangalam Birla) keen interest in collaborating with Enka International, which is part of AKZO Nobel of the Netherlands.
  2. Century Enka manufactures industrial yarn, textile yarn, and fabric, including Nylon Filament Yarn (NFY) and Nylon Tyre Cord Fabric (NTCF).
  3. Century Enka is India’s largest manufacturer of NFY and the second-largest manufacturer of NTCF.
  4. In India, nylon yarn is marketed under the brand name ‘Enkalon.’
HeadquarterMaharashtra, India
SectorTextile

Area of Operation:

  • Century Enka manufactures a diverse range of High-quality Nylon Processed Yarns for a variety of applications.
  • Nylon industrial yarns are used in a wide range of applications, such as fish-twines, conveyor belts, sports and activewear, intimate and foundation wear, and so on.
  • They aspire to be a leading and dependable organization in the tire reinforcement and man-made textile yarn industries.
  • Century Enka operates two manufacturing plants, one in Pune (Maharashtra) and the other in Bharuch (Gujarat).
  • Century Enka has two consumers who account for 80% of its receivables, and the company receives payments from these parties on time.
century
 MD & CEOMr. Suresh Sodani
ChairpersonMrs. Rajashree Birla (mother of Kumar Mangalam Birla)

Board of Committees:

SubsidiariesThere is no subsidiary company/ network firm/ network entity.
Competitors• Trident Ltd (Market cap of ₹ 26,830 Cr)
• Indo Rama Synthetics (India) Ltd (Market Cap of ₹ 1,847 Cr)
• Surat Textile Mills Ltd (Market cap of ₹ 314 Cr)

Shareholding Pattern:

  • Birla Group Holdings Private Limited – 16.5%
  • Century Textiles And Industries Ltd – 5.8%
  • LIC of India – 4.82%
  • Hitesh Ramji Javeri – 2.86%
  • Harsha Hitesh Javeri – 2.38%

Industry Overview:

  • The industry, however, is dominated by small unorganised players with weak financials and with players who opportunistically switch between nylon and polyester. The industry suffers from low margins because of intense competition amongst domestic players and competition from imports. Dependence on imports and volatility in raw material prices also impacts the margins. After the lockdowns were relaxed, pent-up demand and empty pipelines resulted in robust demand in H2 FY21. Like NTCF, lower imports due to shipping disturbances and revival in local demand in China gave NFY demand a renewed thrust in India.
  • Within the synthetic yarn segment of the textile industry, Century Enka produces Nylon Tyre Cord Fabric (NTCF) for the tyre industry, High Tenacity Yarn (HTY) for technical textiles and Nylon Filament Yarn (NFY) for the apparel industry.

Profit and Loss Statement:

Consolidated P&L:

 Mar-16Mar-17Mar-18Mar-19Mar-20Mar-21
Revenue1,1481,1851,4161,7911,4231,221
Expenses1,0141,0031,3051,6411,3301,102
Op. Profit13518311215193118
Profit before tax881401091198692
Net Profit599170779671
EPS in Rs27.0541.6332.0835.0543.7232.46

Consolidated P&L:

 Mar-16Mar-17Mar-18Mar-19Mar-20Mar-21Growth (5 years)
Revenue from Operations–3%19%26%-21%-14%2.89%
Expenses–-1%30%26%-19%-17%3.74%
Operating Profit–36%-39%35%-38%27%4.01%
Profit before tax–59%-22%9%-28%7%5.07%
Net Profit–54%-23%10%25%-26%7.96%
EPS in Rs–54%-23%9%25%-26%7.84%

Key Pointers:

  1. Expenses of the company majorly include 60% Material cost and 18% Manufacturing cost which fits into the average bracket in this industry.
  2. Company has been reporting weak sales growth of just 2.89%
  3. Due to the Covid pandemic the comapany has been suffering in the past 2years. 
  4. It has been reporting poor profit growth in the past 5 years.
  5. The company’s EPS is on the higher side compared to its peers.

Balance Sheet (In Crores):

Standalone Balance Sheet:

 Mar-16Mar-17Mar-18Mar-19Mar-20Mar-21
Equity Capital222222222222
Reserves7568338799331,0081,062
Borrowings705347382313
Trade Payables32687293104127
Total Liabilities1,0161,1191,1641,2311,2641,339
Fixed Assets602569575548528492
Investments809887168262302
Other Assets 333447499513471544
Cash Equivalents64257660
Loans n Advances191741746851
Total Assets1,0161,1191,1641,2311,2641,339

Standalone Cash Flow:

 Mar-16Mar-17Mar-18Mar-19Mar-20Mar-21
Cash from Operating Activity1926156122142109
Profit from operations142186115157116132
Inventory56-84122-1541
Recievables8-33-18251-85
Working capital changes74-79-2810436
Direct taxes-24-47-31-44-17-29
Cash from Investing Activity-83-20-8-110-104-76
Fixed assets purchased-22-23-51-39-28-13
Investment Purchases-64-120-77-860
Investment Sold27130044
Cash from Financing Activity-108-43-28-31-38-29
Interest Paid-10-6-4-4-4-2
Dividend Paid-16-20-18-18-18-17
Repayment of borrowings-82-17-15-18-21-9
Net Cash Flow1-220-18-14

Financial Ratios:

Stock Price:

1. Current Price₹ 508.00
2. Market Cap₹ 1,110 Cr
3. Yearly fluctuation₹ 219 – 637

Ratios:

 P/EROCEROEOp.Margin 
Century Enka Ltd.6.078.9%6.88%11.66%
Trident Ltd.35.310.0%10.50%18.51%
Indo Rama Synthetics (India) Ltd.6.311.5%44.90%5.62%
Surat Textile Mills Ltd.11313.4%11.00%10.66%
Disclaimer: This shouldn’t be construed as a stock recommendation, investors discretion is advised while investing.

Read Next: Exide Industries Ltd.: Should you invest?

For more information, reach us at [email protected]

Team, MyGoalMySip.

Tags: INVESTMENTMUTUAL FUNDSSAVINGSSTOCKS
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    About Us

    MyGoalMySip is an Online Mutual fund investment platform powered by Prudent Wealth. As an investor, it might be hard to find the perfect investment opportunity; therefore, we’re here to help you make an informed decision.

    Our goal is to educate people and make them financially literate, and at the same time guide you in your investment journey, in short MyGoalMySip is your investment buddy.

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