Century Enka freezes at 20% upper circuit; stock zooms 58% in a month

Last month, the board had approved Rs 263 crore capex plan to have necessary assets for upcoming business opportunities

Shares of Century Enka were locked in the 20 per cent upper circuit band at Rs 396.60 on the BSE on Wednesday on the back of heavy volumes. In the past one month, the stock of the company, engaged in manufacturing of synthetic yarn, has zoomed 58 per cent as compared to a 5.6 per cent rise in the S&P BSE Sensex.

Trading volumes on the counter jumped over five-fold with a combined 2.7 million shares having changing hands on the NSE and BSE till 01:13 pm. There were pending buy orders for 174,000 shares on both the exchanges, data shows. In comparison, the S&P BSE Sensex was down 0.91 per cent at 51,463 points.

In January-March quarter (Q4FY21), Century Enka's net profit more-than-doubled at Rs 48.57 crore on the back of a strong operational performance. The company had reported profit of Rs 21.88 crore in Q4FY20. On sequential basis, net profit grew 50 per cent from Rs 32.47 crore in Q3FY21.

Moreover, the company's revenue from operations grew 29 per cent year on year at Rs 445.57 crore from Rs 344.27 crore in the corresponding quarter of previous fiscal. EBITDA (earnings before interest, taxes, depreciation, and amortization) margin expanded by 843 basis points (bps) to 15.73 per cent from 7.29 per cent in a year ago quarter.

Going forward, the company expects Nylon Tyre Cord Fabric's (NTCF) demand to pick up on the back of a good monsoon which in turn should lead to the revival of rural demand, and increased fund allocation to the infrastructure sector. "The revival of Nylon Filament Yarn (NFY) demand could take longer, due to non-availability of labour, and the lingering effect of the lockdown on consumer demand," the management said.

Meanwhile, the board of directors of Century Enka had, last month, approved investment of Rs 240 crore to strengthen its competitive position in tyre reinforcement market by modernization of plant, and augmenting capacity by around 30 per cent and Rs 23 crore for increasing the capacity of draw texturized yarn and mother yarn. The funding for Rs 263 crore capital expenditures (capex) is mix of debt and internal accrual. The rationale behind capex is to have necessary assets for upcoming business opportunities, the company had said in a statement.