Century Textiles shares surge 14% after unit forms JV for ₹5,000 crore luxury housing project

Shares of Century Textiles and Industries, the real estate venture of the Aditya Birla Group, surged 13.70% in early trading today to reach ₹2,094 apiece. This spike followed the company's announcement that its wholly-owned subsidiary, Birla Estates, has entered into a joint venture with Barmalt India Pvt. Ltd.

The joint venture aims to develop a luxury residential group housing project in Sector 31, Gurugram. The land parcel spans 13.27 acres, with a development potential of approximately 2.4 million square feet and an estimated revenue potential of around ₹5,000 crore.

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Mr K T Jithendran, MD & CEO of Birla Estates, stated, “As we expand our footprint in the Delhi NCR region, we're pleased to announce the addition of this new project in one of Gurugram's most promising micro market. This project reflects our commitment to offering modern homebuyers world-class living spaces in strategically chosen locations, complemented by exceptional amenities. We are confident this project will set a new benchmark in the Gurugram real estate market." 

Century Textiles finds itself in a favorable position as the residential real estate market is projected to reach new heights in the current financial year, driven by surging demand and strong consumption patterns.

FY25 is poised to be a transformative period, fueled by urbanisation trends, a growing rental market, and consistent property value appreciation. The industry's increasing demand for premium and luxury housing bodes well for the company. 

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Meanwhile, the company, which generates 56% of its revenue from the pulp and paper segment, is poised for growth as demand for writing, printing, and copier paper is expected to improve post elections, with government tenders opening in Q1 FY25. Seasonal factors are anticipated to moderately boost demand, and an increase in exports is likely to provide improved realisations and greater price stability.

Looking at the company's other developments, it has decided to discontinue all operations at the Birla Century Bharuch unit, except for some minor manufacturing activities and the supply of yarn to Birla Advanced Knits Private Limited, a joint venture with Grasim Industries Limited. This decision comes despite efforts to achieve a turnaround, as adverse market conditions and a lack of viable orders to cover costs make it unsustainable, as per the company's Q4 investor presentation. 

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During the March-ending quarter (Q4FY24), the company reported a revenue of ₹1,699.70 crore, marking a 71.56% improvement compared to ₹990.69 crore in Q4FY23. The revenue from the real estate segment surged sharply to ₹668.34 crore, up from just ₹36.12 crore in Q4FY23.  The revenue contribution from the real estate segment increased to 43% from 4% in Q4 FY23.

Meanwhile, revenue from the pulp and paper segment moderated to ₹859.07 crore from ₹909.85 crore in the year-ago quarter, and revenue from the textile segment remained flat at ₹12.49 crore. 

On the bottom line, the consolidated profit after tax slumped to ₹20.64 crore due to a sharp increase in operating expenses, including the cost of land, construction, and other related real estate development costs.

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