Multi Baggers

Century Enka

Incorporated in 1965 in collaboration with Enka International, a part of Akzo Nobel, Century Enka began buying back the stake from Accordis since 2005 and now; it’s a B K Birla company.

It has three plants with state of the art technology: Century Enka at Pune, Konkan Synthetic Fibres at Mahad in Maharashtra and Rajashree Polyfil at Bharuch in Gujarat. It has installed capacity of 1,10,000 tons/annum of Nylon Chips/NFY & Polyester Chips/PFY, with 12,000 tons/annum of Industrial Filament/Tyre Cord Fabric. Nylon tyre-cord fabric (NTCF) capacity of the company from stands at 22,000 MT per annum.

The company is the largest supplier of polyester chips in the country and the second largest supplier of Nylon Tyre Cord Fabric.

The company posted a very good performance for the first quarter ended 30th June 2009. On a YoY, net sales was down 10% at Rs.308.01 crore. But it managed to bring down its raw material costs by 20% and this helped the overall margins and topline.

EBIDTA was up 54% at Rs.62.08 crore. Net profit was up by an unbelievable 489% at Rs.28.35 crore. This net profit for one quarter is 70% higher than the net profit of Rs.16.62 crore posted for FY09.

The first quarter also saw the company post one of its highest profit margins in recent times. OPM was at a very healthy 20.16% as against 8.12% in Q1FY09. NPM was up at 9.20% compared to 1.41% in previous first quarter.

The BK Birla group holds 25.23% stake in the company. In the AGM of the company, patriarch BK Birla stated that promoters stake in the company would be increased to 40% within the next three years.    

This is a company which will be managed by Kumaramangalam Birla as that is his grandfather’s (BK Birla) wish. 

Due to the downturn in the auto sector, the company had suspended about 30-40% of its NTCF production. It has managed to clear off the inventory and with the sector also showing signs of recovery; it is expected to revert back to full production levels soon.

The BK Birla group has a 25.23% stake in the company and institutional holding is 11.47% of which LIC has a 8.24% holding. Bodies Corporate hold another 12.19%.

On an equity of Rs.20.05 crore, EPS of the company for Q1 of FY10 is at Rs.14.13 on a face value of Rs.10 per share.

The cash profit for June 2009 quarter was at Rs.43.78 crore, with a healthy cash EPS of Rs.21.84, and book value of Rs.243 per share as at 30.6.09

FY10 is expected to be good for the company. With the economy showing definite signs of recovery, it is bound to end the year on a much better note.

At the current price of Rs.140, the stock is a bargain and could well become one of the good picks as it can move to 200 in 1 year.

Disclaimer: The writer may be deemed to be concerned or interested in the recommendation as he and his clients are invested in this scrip.