Auto Parts & Equipment company Varroc Engineering announced Q2FY26 results Consolidated revenue from operations was Rs 22,073 million in Q2FY26 a growth of 6.1% YoY. EBITDA: Rs 2,018 million against Rs 2,010 million during Q2FY25. PBT before JV profit for Q2FY26 came at Rs 912 million as compared to Rs 901 million reported in Q2FY25 PAT: Rs 633 million against Rs 578 million during Q2FY25. Tarang Jain, CMD, said: “The Indian economy continues to perform well, experiencing robust growth and has become the world’s fastest growing major economy. India's real GDP grew by 7.8% in the April-June 2025 quarter. The inflation in India continues to moderate. Globally, rising tariff barriers, supply chain restrictions, and geopolitical tensions are increasing uncertainty for businesses. Supply chain resilience and regionalization are becoming key corporate strategies amid this uncertainty. The automotive industry is also preparing to deal with these challenges. In these uncertain times, it becomes very important for the Company to find ways to manage this uncertainty and grow simultaneously during this period. We are moving fast to make our organisation more agile, fundamentally strong, and customer-focused to succeed in this environment. Over the last 3 years since the divestment exercise, we have been consistently improving on financial prudence, cost reduction and customer delight. As you all know, we focused on free cash flow generation and managed to reduce our debt significantly. As a result, the Net Debt/EBITDA, which was more than 2x in FY 23, is now below 0.3X . The interest burden which was close to 3% of revenue in Q2 of FY 23 has been reduced to below 1.5% in Q2 of FY26. We also improved our gross margins during this period by almost 1%. We also delayered the organization during Q4 of FY 25, which moderated our manpower costs. All these improvements reflected in improvement in PBT margin during this period from 1.1% to over 4% now. We are also continuously improving our speed of response, program management efficacy and delivering first time right. As indicated earlier, we had also established a strong R&D; facility in China this FY to enhance our capabilities and to take advantage of skillset available there. We are also exploring opportunities to rationalize fixed manpower cost in plants through VRS schemes. In taking these decisions, we are giving more importance to long-term growth rather than short-term impact. Over the last few years, we have been able to scale our EV products portfolio and this has resulted in our revenue growth in this segment helping the overall growth of the Company. Today, more than 11% of Revenue comes from supplying to EV customers. We are also experimenting with AI in areas like quality inspection and corporate functions to improve productivity and cut down inefficiencies. We are also working on various other initiatives to reduce working capital and improve throughput. We will be sharing more updates on the same in our future discussions with you. Our growth plan is built mainly on 3 pillars. The first opportunity for growth comes from the disruption which CASE (Connected, Autonomous, Shared, and Electric) is bringing in the automotive sector. As an organisation, we are focusing significantly on E-mobility, connectivity and ADAS. The second pillar of growth comes from business portfolio management. In this year only, taking advantage of the arbitration verdict, we took the call not to have manufacturing footprint in China. Instead, we have set up a location in Thailand which is a well-established auto manufacturing hub and offers several export opportunities. The third pillar of growth is looking through adjacencies, and the company is looking to further grow its business in aftermarket, exports, non-auto both organically and through M&A.; These strategic calls along with strong financial prudence enabled us to generate good amount of free cash flow and improve the return ratio’s. In Q2FY26, the ROCE of the Company was 23.6% as compared to 12% seen in FY23. Coming to the performance in this quarter, let’s first understand the industry performance in India. In terms of Automotive production in India, during Q2FY26, all the segments registered growth on YoY basis as well as QoQ basis due to buoyant economy as well as early festive season: On YoY basis, 2W grew by 10.6%, 3W grew by 18.3%, PV grew by 4.2% & CV grew by 11.8%. On QoQ basis, 2W grew by 17.4%, 3W grew by 39.3%, PV grew by 6.5%, and only CV grew by 2.9% Coming to the operational performance, during Q2FY26, the Company registered consolidated revenue of Rs.22.7 bn with a growth of 6.1% YoY, with India operations growing at 7.0%. The Indian revenue was impacted by industry wide rare-earth issue. This resulted in loss of INR ~ 750 million of Revenue in Q2FY26 or else the growth in the Indian operation would have been 11.8%. As stated earlier, for future growth perspective, we had established an R&D; centre in overseas location to support 4W lighting and electronics businesses. This has resulted in higher employee cost starting from Q1FY26. Thus, our EBITDA for the quarter was around 9.1% as compared to 9.7% on YoY basis. Our PBT before JV profit was 4.1% of revenue in Q2FY26 as against 4.3% in Q2FY25. However, I would like to bring to your attention to the point that the India EBITDA and PBT were strong at 11.5% and 7%+ respectively and grew both on year-on-year basis as well as sequentially. As explained earlier, the overseas electronics, lighting and forging businesses continue to face challenges due to customer concentration and macro environment. However, we are winning significant orders for the overseas electronics and lighting businesses already and the turnaround is expected to be visible from H2 of FY 27. We continue to strengthen our balance sheet. The net debt of the company in H1FY26 was reduced by INR 3,680 million and as a result, the net debt to equity is reduced to below 0.22x. The absolute net debt figure was at INR 3,800 million. With significant growth-enabling investments planned in H2, the net debt may see only modest improvement in H2 of this year. In H1FY26, we achieved net new business wins with annualized peak revenues of Rs. 8,928 million. Notable, business win among these are 4W lighting business for passenger vehicle and also business win from existing EV customer for their increased volume in near future. We also remain confident to win High Voltage Electronics for a range of high-performance e-powertrain components for our Romanian business before the end of this CY. As emphasized earlier for the transformation to continue in this volatile new-normal environment, we continue to align ourselves and focus on managing the uncertainties while also aiming for growth simultaneously.” Result PDF
Auto Parts & Equipment company Varroc Engineering announced Q1FY26 results Q1FY26 Revenue at Rs 20,276 million compared to Rs 18,989 million during Q1FY25, change 6.8% YoY, with India Operations registering a 7.2% growth EBITDA at 9.5% vs 9.1% on YoY basis. Q1FY26 PBT (before exceptional and JV profits) at 4.1% vs 2.8% in Q1FY25. Net new annual peak revenue from order wins in Q1FY26 of Rs 2,905 million. Revenue from supplying to EV customers in Q1FY26 was around 11.0% of revenue. Filed more than 10 patents in Q1FY26, taking the total filing to more than 130+. Net debt reduced by Rs 3,002 million in Q1FY26 and was at Rs 4,478 million. Result PDF
Auto Parts & Equipment company Varroc Engineering announced Q4FY25 & FY25 results Q4FY25 Financial Highlights: Revenue from Operations increased by 6.3%, from Rs 19,749 million to Rs 20,992 million. EBITDA decreased by 2.4%, from Rs 2,187 million to Rs 2,134 million. EBITDA Margin declined by 90 bps, from 11.1% to 10.2%. PBT before JV & Exceptional Items rose by 3.6%, from Rs 998 million to Rs 1,034 million. Share of Profit of JV decreased from Rs 51 million to Rs 3 million. PBT declined by 55%, from Rs 1,050 million to Rs 473 million. FY25 Financial Highlights: Revenue from Operations increased by 8%, from Rs 75,519 million to Rs 81,541 million. EBITDA increased by 2.3%, from Rs 7,590 million to Rs 7,767 million. EBITDA Margin fell by 60 bps, from 10.1% to 9.5%. PBT before JV & Exceptional Items rose by 15.7%, from Rs 2,705 million to Rs 3,129 million. Share of Profit of JV declined sharply by 91.7%, from Rs 444 million to Rs 37 million. PBT decreased by 46.2%, from Rs 3,149 million to Rs 1,693 million. The Board of Directors have recommended dividend of 100% of Face value i.e. Rs 1 Tarang Jain, CMD commented, “India has now become the 4th largest economy and the GDP had a steady growth of 6.2% in Q3FY25. Softening of Inflation in last few quarters and interest rates reduction globally encouraged our Central Bank to reduce Repo rate by 50 basis points. Weak growth in consumption, on top of global & regional conflicts and uncertain tariff regime, may impact discretionary spending which can have impact on Automotive Industry. However, we remain confident about the medium to long-term growth prospects of automotive industry. During Q4 of FY25, all the segments registered moderate growth on YoY basis : - 2W grew by 5.8%, PV grew by 5.2%, CV grew by 3.1% & 3W grew by 9.5%, On QoQ basis also, almost all segments, other than 2W, reported strong growth as normally Q4 is a strong quarter for India automotive industry every year. 2W de-grew by 1.2%, 3W grew by 3.0%, PV grew by 20.4%, and only CV grew by 20.9% Before discussing the operational performance of the Company, I would like to highlight a few other aspects which will help the Company to become more sustainable and enable value enhancement for the stakeholders : In FY25, we filed 25 patents and were granted more than 10+ patents. Thus, the total filings made now add up to more than 120 for the Company, which will further strengthen the intellectual property of the Company and help in developing technologically advanced products at an affordable cost. Secondly, we also completed the sale of our stake in the China JV and realised the net proceeds of RMB 290 million during May 2025. Thirdly, our sourcing of electricity from Renewable Energy has been increasing throughout FY25 and was around 31% for FY 25 as against 13% last year. For the month of March’25, it reached around 45%. We are also working on commencement of phase-2 of renewable energy project which will further improve this to > 50% in the coming year. These initiatives will boost our ESG credentials, besides giving us savings in electricity cost. Now coming to the operational performance, during Q4FY25, the Company registered consolidated revenue of Rs 21 bn with a growth of 11% YoY on like-to-like basis, with India operations growing at 13%. Our EBITDA for the quarter was around 10.2% on back of improvement in the gross margin and benefits of operating leverage. Our PBT before exceptional items and JV profits was over Rs 1 billion or 4.9% of revenue in Q4FY25. As you all know, we have been working on structural changes like merger of VEL and VPL and exiting from China JV. We had to recognize certain one-time exceptional items primarily relating to these initiatives, which will simplify our operations and also improve our financial performance going forward. We continue to strengthen our balance sheet and return ratios. The net debt of the company in FY25 reduced by 2,348 million and as a result the net debt to equity reduced to below 0.5x at the end FY25 from 0.64X at the end of FY24. The absolute net debt figure was at 7,480 million. ROCE (before tax) for FY25 was 20.8% and free cash flow generation was also healthy at Rs 3116 millions or 3.8% of revenue before growth capex in land. In FY25, we also achieved net new business wins with annualized peak revenues of Rs 11,734 million, with EV models constituting more than 55% of this. It is more heartening to see business wins in our overseas operations also, which will improve profitability from FY 27 onwards. Our continuing focus on revenue growth, improvement in gross margin, control on fixed cost and optimization of capex and working capital will enable us to generate healthy free cash flows in the future also.” Result PDF
Auto Parts & Equipment company Varroc Engineering announced Q3FY25 results Consolidated revenue from operations was Rs 20,753 million in Q3FY25. PBT Margin for continued operations before exceptional and JV profit for Q3FY25 came at 3.2%. Strong order book especially in overseas operations to improve the operating leverage from FY27. Tarang Jain, Varroc Engineering, CMD, said: “The Indian GDP has slowed down little as compare to last year but still remain strong as compared to modest global growth. The rural consumption has remained strong in past few quarters. The income tax cut by the Govt in the budget and interest rate reduction by the central bank augurs well for India, as it will help in further improving the consumption of the discretionary goods like automobiles. during Q3FY25, the Company registered revenue of Rs20,753 million with a growth of 10.1% YoY. Various new programs which we won in the past period moved to production during the quarter. Thus, the tooling sales in this quarter was much higher. On the other hand, higher tooling cost had a one-time impact on our gross margins. Despite that our EBITDA on YoY basis remained same at 9.2% whereas on QoQ it fell by 50 basis point. Our PBT before exceptional item and JV has improved by 80 basis point on YoY mainly due to control on Capex and generation of free cash flow which is resulting in lower depreciation and interest cost. On QoQ, the PBT has fallen which is adversely impacted by forex translation losses. The Company balance sheet continues to strengthen along with improvement in return ratios. The net debt of the company in 9M FY25 reduced by 1,967 million and net debt to equity reduced to 0.50X at the end of 9MFY25 from 0.64X at the end of FY24. The absolute net debt figure was 7,860 million. Annualized ROCE at the end of 9MFY25 was 19.3%. The orderbook for 9MFY25 has further strengthened and we continue to build the orderbook in both India and overseas business. In 9MFY25, we have achieved net new business wins with annualized peak revenues of Rs10,847 million. The orderbook from EV models constitutes more than 55% of these wins. It is more heartening to see business win in our overseas operations. We have two big business win for our overseas operations. First one is Front Drive & Rear Drive Inverter Electronics for Electric Passenger Vehicle. The second one is Interior ambient lighting. The start of production will take place from FY27. These wins are testament to our dedication to excellence and showcase our advanced electronics manufacturing capabilities. In Indian operation the order book which is worth mentioning is the win for power electronics i.e. Traction Motor and Controller for 3W player. The SOP of this will also happen in next CY. Our endeavor will remain to expand our presence through focused products to drive sustainable growth, improve the gross margin, keep control on fixed cost and optimize the working capital. All of this will help us to deliver value to our shareholders.” Result PDF
