Century Textiles Shares Soar 14% Following JV Announcement with Barmalt

Shares of Century Textiles and Industries, the real estate arm of the Aditya Birla Group, surged 13.70% in early trading 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 JV's Luxury Housing Project

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.

Birla Estates' Expansion Strategy

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-markets. 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."

Favorable Market Conditions

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 urbanization 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.

Diversified Business Portfolio

While the real estate segment contributed 43% to the company's revenue in Q4FY24, up from just 4% in Q4FY23, Century Textiles also generates 56% of its revenue from the pulp and paper segment. This 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.

Strategic Business Decisions

The company has decided to discontinue all Birla Century Bharuch unit operations, except for some minor manufacturing activities and yarn supply 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.

Overall, Century Textiles' diversified business portfolio and strategic moves, including the luxury housing joint venture, position the company for growth in the coming financial year.