Century Textiles - Is it the new Godrej property

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Century Textiles Con Call Key notes Highlights:

  1. 67% growth year on year. EBITA improved to Rs.133 crs from Rs.66 crs last year. Free cash flow Rs. 53 crs. This quarter there was a good turnaround in textie and paper business.

  2. There are three business verticles :-

  3. 1 Realestate – Launched second phase of Birla Vanya in September and clocked Rs.105 crs of sales in first month. Rs76 crs from all the projects. No impact on prices of project even if cement and steel prices go up. For the new projects first focus is on residential buildings and collecting cash. In 2 to 3 years will launch commercial buildingds. The Mangdi project in Bangalore will be over by 3 years. Top line expected 600crs and IRR 30%.

    1. Pulp and paper – This quarter major achievement is highest volume in sales. Q2 sales grew by 64% YoY to rs 686 crs. Capacity utilization more than 100%. This is due to increase in demand for paper, opening of high school and offices. There was an increase in prices of raw material and import of pulp causing increased cost of production. Shortage of container has increased logistics cost and impacted exports. ESG initiatives have been taken.
    1. Textile – Inventory has come to normal level with festive season coming up. Sale grew by 109% year on year to Rs. 261crs. Raw material prices have again increased. Overall good. Birla is investing on product development. Increase in cotton prices and import duty, margins are under pressure.

  6. Q4 no supply pressure of raw material will be seen. Eligible for PLI scheme. 8% manufacturing cost has increased in paper segment.

  7. JV with Grasim. 50% Grasim and 50% Century Textile to develop specialized products. Revenue expected is 450 to 500 crs and margins will be 20% to 25%. 40% power from renewable resources and 60% from coal.

  8. This year we can expect a Joint Venture the details will be given when finalized.

  9. Recycled paper only 60 million ton went into the market due to reduced demand and high costs. Chemical and coal prices have gone up so retailers also have to bear the cost. Capex- no major plan in textile business. It will be environment related and will be met with internal cash flow.

  10. Manufacturing capacity used is more than 100%. Dependence of real estate is not just on existing business but also borrowings of parent company. Currently there is concentration on 4 cities, Pune Mumbai, Delhi and Bangalore for real estate.

  11. Coming quarters will be better.

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