Business Overview
Century Enka brain child of BK Birla. It is formed with collaboration of Akzo Nobel Netherlands which is one of the largest paints company in the World.
It is the largest producer of NFY and second largest manufacturer of NTCF in India. It has 25% domestic market share. The Company has capacity of 30 thousand capacity for NFY and 32 thousand capacity for NTCF.
NFY stands for Nylon Filament yarn. It is mainly used by Apparel industry. NTCF stands for Nylon Tyre Chord Fabric. It is mainly used as reinforcement material in bias tyres.
The Company has two manufacturing units one situated in Pune and other in Bharuch.
Stock Performance
Above is long term price performance of the Stock. Based on above chart you can infer that it is cyclic stock. It was trading at 100 mark in year 2002 and after ups and down is trading near 200 mark. So long term investors have not made any returns in the counter.
But the cyclic investors have made money in the counter by investing at right price points as it should be done for cyclic stocks. The dividend yield of the Stock is very lucrative with more than 3% at current price.
My Opinion
Century Enka has 25% domestic market share. The products created by this Company is majorly used in Apparels and Reinforced tyres. Apparels is evergreen sector and will always have demand. So one of the sectors catered by products of the Company is sustainable. This will give comfort to investors.
The product consumed by Apparel industry is top product from the Company. So it has to expand the capacity to meet existing demand and also explore opportunities in overseas market. This will help Company grow and diversify geographical dependency.
The management is decent with BK Birla at help of affairs. I will track the Company and will play it as cyclic stock. You should not take long investment position in this counter. It is better to have play it in cyclic manner only.