Auto Parts & Equipment company Varroc Engineering announced Q2FY25 results Consolidated revenue from operations was Rs 20,808 million in Q2FY25. PBT Margin for Q2FY25 came at 4.4% higher by 50 basis point YoY and 150 basis point on QoQ. Net Debt reduces by 1,554 million in first half and Net Debt/Equity improves to 0.50 in H1FY25. Management Commentary: “The India GDP growth for Q1 of FY 25 was 6.7%. This was lower than the earlier projections given by RBI and lower than the growth levels of the previous few quarters. While urban consumption is down, rural consumption has been improving during the FY which is also reflected in good growth seen in 2W industry. In Q2FY25 on YoY basis 2W grew by 12.5%, 3W grew by 6.3%, PV de-grew by 0.7%, CV de-grew by 13.3%. However, on QoQ basis, we saw growth in almost all segments other than CV, primarily due to the early festive season. 2W grew by 6.8%, 3W grew by 29.3%, PV grew by 5.7%, CV de-grew by 5.2% Destocking by dealers before Euro 5+ and lack of growth driven by lower consumption is impacting the European and American 2 Wheeler market. In the Asean region, the growth was largely driven by low-end segments and the premium segment continues to struggle for growth in this region. During Q2FY25, the Company registered revenue of Rs.20,808 million with a growth of 10.3% YoY. The Indian business reported a growth of 13.4%. The PBT of the company was at 4.4% for Q2FY25 due to positive operating leverage seen in India operations. The consolidated profitability remains impacted by degrowth in overseas businesses, R&D; spending in overseas operations for future growth. On QoQ, the Company reported improvement all around. The Revenue on QoQ grew by 9.6%, EBITDA margin improved by 60 basis point and PBT margin by 150 basis point. The Company balance sheet continues to strengthen along with improvement in return ratios. The net debt of the company in H1FY25 reduced by 1,554 million and net debt to equity have reduced to 0.50X at the end of H1 FY25 from 0.64X at the end of FY24. The absolute net debt figure is 8,273 million. Annualized ROCE at the end of H1FY25 is 19.0%. The capex spent in H1FY25 was 1,030 million. The capex spending in H2FY25 will increase driven by need for additional SMT lines and increased EV capacity. We are also investing in land in southern & western part of India for future growth. As indicated earlier, we are working on various initiatives to drive cost reductions across several categories of cost with special focus on fixed cost. Some of these measures have already started showing impact on our bottom-line but most of them will fully get reflected by Q4 FY25. We have also rationalized headcount levels across businesses and functions. We continue to look at avenues to make the organization more lean, nimble & agile and to increase speed in decision making. The orderbook for H1FY25 continues to remain healthy and we continue to build the orderbook in both India and overseas business. In H1FY25, we have achieved net new business wins with annualized peak revenues of Rs.6,046 million. The orderbook from EV models constitutes more than 37% of these wins. In the first half we added various new-age technological advanced product portfolio in our business. We started the production of Integrated starter generator and soft-touch door panels whereas we won business for Battery management system for electric vehicles thus further increasing our content in electric vehicles. We also won business for Interior ambient lighting from a global player which helps in increasing our offering for 4- wheeler vehicles. We will continue to innovate by further strengthening our engineering capabilities, streamlining our operations through further cost reductions and working capital optimization. Our endeavor will remain to expand our presence through focused products to drive sustainable growth and deliver value to our shareholders. Beyond business, we continue to focus on various ESG aspects to make the organization more sustainable. We have published our first sustainability report which can be accessed on our website. Our efforts towards giving back to society is being also recognized. The Kham River Restoration was recognized by the WRI Ross Center for Sustainable Cities, as one of the top five finalists globally for their prestigious award. The project also received globally recognized prestigious award i.e. The St Andrews Prize for the Environment.” Result PDF
Auto Parts & Equipment company Varroc Engineering announced FY24 results: Consolidated revenue from operations was Rs 75,519 million in FY24 Consolidated PBT margins in FY24 were at 4.2%, improved by 300 bps Net Debt/Equity improves to 0.64 in FY24 from 1.27 in FY23 Strong new order lifetime win of Rs 87.0 billion in FY24 Tarang Jain, CMD commented, “The global economy faced several uncertainties during FY24 due to intensified conflicts in Europe and Asia. The expectations for decisive rate cuts across the world have been moderated in recent times, as underlying inflationary pressures are not easing as fast as expected. However, the risk of global recession seems to be receding now. We hope that the geo-political issues don’t escalate further. The Indian economy continues to outperform and in Q3 FY24 the GDP growth was robust 8.4%. The automobile sector in India registered growth across all segments during FY24. The passenger vehicle segment grew by 6.9% and CV segment by 3.0%. The 3W and 2W segments registered strong growth of 16.0% and 10.3% respectively. Strong domestic demand and stable economy have enabled this growth. In Q4FY24 on YoY basis, the automobile growth was strong with 2W growing by 26.5%, 3W by 8.4% and PV by 9.7%. The CV segment saw a marginal de-growth of 0.5%. For the full FY24, our India operations continued to deliver strong performance with growth of over 14.1%. Our overseas business was impacted in FY24 due to significant degrowth in 2W automotive sales and heavy customer concentration in certain overseas markets. The full year revenue was Rs. 75,519 million, the PBT for the year was Rs. 3,149 million which includes profit from our joint venture of Rs 444 miilion. The PBT margin improved by 300 basis point on YoY basis and came at 4.2%. PBT for the year. PBT was also impacted by certain onetimers like the provision of Rs.160 million created for doubtful recovery of receivables from an EV customer. In FY24 the capex spent was Rs. 2,016 million. Thus, better profitability, tighter control on capex & working capital enabled us to reduce the net debt to below Rs. 10,000 million at Rs. 9,826 million. The Net Debt to Equity ratio improved to 0.64 in FY24 from 1.27 in FY23. The loan servicing ability also improved as our Net Debt to EBITDA improved to 1.29 in FY24 from 2.13 in FY23." Result PDF
