InvestorQ : Can we look to buy Century Textiles after the sharp growth in profits that the company has shown in the March quarter?
Moii Chavate made post

Can we look to buy Century Textiles after the sharp growth in profits that the company has shown in the March quarter?

Answer
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Sam Eswaran answered.
1 year ago


How the results of Century Textiles panned out?

For the March quarter, Century Textiles saw total revenues grow by about 2% to Rs.1008 crore. During the same period, the stand alone net profits of the company more than doubled to Rs.227 crore. However, the company has also confirmed that this figure was not comparable as there was an exceptional item. Last year, Century Textiles had given Grasim the license to operate its Viscose Filament Yarn (VFY) business and for that Grasim had paid Century an upfront royalty of Rs.600 crore. That had been partially booked in the current year and that had led to the sharp growth in the profits.

Should you look to buy or hold Century Textiles at current prices?

The stock is currently undergoing a major restructuring. Apart from licensing out its VFY plant to Grasim, Century has also signed an agreement to hive off its cement unit to Ultratech. This should help Century generate cash flows to the tune of Rs.3000 crore and allow it to focus on its core business. Century also has a very strong realty franchise which could give substantial value in the coming years. Considering its strong dividend yield and sustained profits, one can look at investing in Century at current prices.