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