Century Extrusions Ltd Upgraded to Hold as Technicals Improve Amid Mixed Financials

Quality Assessment: Management Efficiency and Financial Stability

Century Extrusions continues to demonstrate robust management efficiency, with a return on capital employed (ROCE) standing at a commendable 17.20% for the latest period. This figure, while slightly down from the half-year low of 14.80%, remains above industry averages, signalling effective utilisation of capital resources. The company’s debt-equity ratio, however, has increased to 0.86 times, the highest in recent periods, indicating a moderate rise in leverage that investors should monitor closely. Interest expenses have also climbed, with quarterly interest payments reaching ₹3.02 crores, reflecting the cost of this increased debt burden.

Despite these headwinds, the quality grade remains stable, supported by the company’s ability to generate profits efficiently and maintain operational discipline. The majority shareholding by promoters continues to provide strategic stability, reinforcing confidence in long-term governance.

Valuation: Attractive Pricing Amid Discount to Peers

Valuation metrics have played a pivotal role in the upgrade decision. Century Extrusions is currently trading at ₹22.60, up 4.97% on the day, yet still well below its 52-week high of ₹34.80. The stock’s enterprise value to capital employed ratio stands at a modest 1.6, signalling an attractive valuation relative to its capital base. This is further supported by a price-to-earnings growth (PEG) ratio of 0.6, indicating undervaluation relative to its earnings growth potential.

While the stock has underperformed the broader market over the past year, delivering a negative return of -8.35% compared to the BSE500’s 5.24% gain, its long-term performance remains impressive. Over five and ten years, Century Extrusions has generated returns of 320.86% and 629.03% respectively, significantly outpacing the Sensex’s corresponding returns of 77.88% and 224.76%. This long-term outperformance underpins the valuation appeal despite recent volatility.

Financial Trend: Flat Quarterly Performance but Rising Profitability

The company reported flat financial results for Q2 FY25-26, with no significant growth in revenue or earnings during the quarter. However, the underlying profitability has improved, with profits rising by 32.1% over the past year despite the stock’s negative price return. This divergence suggests operational improvements that have yet to be fully reflected in the share price.

ROCE for the half-year period has dipped to 14.80%, the lowest in recent times, signalling some pressure on capital efficiency. Nevertheless, the company’s ability to maintain profitability amid challenging market conditions is a positive sign. The debt increase and higher interest costs remain concerns, but the overall financial trend is stabilising rather than deteriorating.

Technical Analysis: Shift from Mildly Bearish to Mildly Bullish

The most significant driver behind the rating upgrade is the improvement in technical indicators. The technical grade has shifted from mildly bearish to mildly bullish, reflecting a more favourable market sentiment. Key technical signals include a mildly bullish daily moving average and a mildly bullish weekly Dow Theory reading, which suggest emerging upward momentum.

However, some indicators remain mixed. The weekly MACD and RSI are bearish, while the monthly MACD is bullish and the monthly RSI shows no clear signal. Bollinger Bands indicate a mildly bearish weekly trend but sideways movement monthly, highlighting some consolidation. The On-Balance Volume (OBV) is bullish on a monthly basis, signalling accumulation by investors over the longer term.

Overall, the technical picture is cautiously optimistic, with the stock showing signs of stabilising after a period of weakness. This technical improvement has been a key factor in the upgrade to a Hold rating, suggesting that the stock may be poised for a recovery if positive trends continue.

Comparative Performance and Market Context

Century Extrusions’ recent price action shows a 4.97% gain on the latest trading day, closing at ₹22.60, with intraday lows of ₹21.40 and highs matching the close. Despite this uptick, the stock remains well below its 52-week high of ₹34.80 and above its 52-week low of ₹15.36, indicating a wide trading range over the past year.

When compared to the Sensex, the stock has underperformed in the short and medium term. Over one month, Century Extrusions declined by 6.34% versus the Sensex’s 1.18% fall, and year-to-date returns are -7.49% against the Sensex’s 8.39% gain. Over one year, the stock’s -8.35% contrasts with the Sensex’s 7.62% rise. However, the company’s long-term returns remain impressive, with three-, five-, and ten-year returns of 123.10%, 320.86%, and 629.03% respectively, far exceeding the Sensex’s 38.54%, 77.88%, and 224.76% over the same periods.

This disparity highlights the stock’s cyclical nature and the potential for recovery given its strong historical performance and improving technicals.

Outlook and Investment Implications

The upgrade to a Hold rating with a Mojo Score of 58.0 reflects a balanced view of Century Extrusions’ prospects. While the company faces challenges such as flat recent financial results, increased leverage, and underperformance relative to the broader market, its attractive valuation, improving technical indicators, and strong long-term fundamentals provide a foundation for cautious optimism.

Investors should monitor the company’s ability to sustain profit growth and manage debt levels, alongside technical momentum, to assess whether a further upgrade to Buy might be warranted. For now, the Hold rating suggests that the stock is fairly valued with potential upside if positive trends continue, but also carries risks that warrant a measured approach.

Summary of Ratings and Scores

As of 29 Dec 2025, Century Extrusions’ Mojo Grade was upgraded from Sell to Hold, with a Mojo Score of 58.0. The Market Cap Grade remains at 4, reflecting its mid-cap status within the aluminium and industrial products sector. The technical trend shift from mildly bearish to mildly bullish was the primary catalyst for this change, supported by stable quality metrics and attractive valuation ratios.

Overall, Century Extrusions Ltd presents a compelling case for investors seeking exposure to the industrial products sector with a focus on aluminium extrusion, balancing risk and reward amid evolving market conditions.

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