Varroc Engineering Limited (VARROC) AI Stock Analysis

• Market Cap: ₹87.98B
• Dividend Yield: 0.16%
• Average Volume (3M): 13.17K
• Price to Earnings (P/E): 60.2
• Beta (1Y): 1.61
• Revenue Growth: 7.38%
• EPS Growth: -73.62%
• Country: IN
• Employees: 3,907
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Auto - Parts
• EPS (TTM): 4.35
• Shares Outstanding: 152,786,400
• 10 Day Avg. Volume: 5,337
• 30 Day Avg. Volume: 13,169
• PEG Ratio: -1.20
• Price to Book (P/B): 4.18
• Price to Sales (P/S): 0.80
• P/FCF Ratio: 14.62
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 69 Neutral
• Price Target: ₹612.00 ▲(0.19% Upside)

Varroc Engineering Limited's overall stock score is driven by strong financial performance and positive technical indicators. The company's robust cash flow and reduced debt levels are significant strengths. However, the high P/E ratio and low dividend yield suggest potential overvaluation, which tempers the overall score.

Positive Factors

Cash Generation

Sustained positive free cash flow and operating cash consistently above net income provide durable internal funding for capex, program launches and debt paydown. This improves financial flexibility, enabling reinvestment in tooling and R&D and reducing reliance on external financing over months.

Debt Reduction

Marked reduction in total debt materially lowers interest burden and leverage, strengthening solvency metrics. Lower leverage increases capacity to pursue new OEM programs and absorb cyclical vehicle demand shocks, supporting more stable operations and strategic investments over the medium term.

Revenue Recovery

Positive revenue growth reflects recovery and expanding volumes across exterior lighting, E/E and polymer/metal components. Growth tied to program wins and OEM relationships supports scale economics and longer-term margin sustainability if the company retains cost discipline and program content share.

Negative Factors

Profitability Volatility

Historical swings from negative to positive net income and persistently thin net margins indicate earnings are sensitive to commodity costs, warranty or program start-up expenses and OEM pricing. This volatility can limit retained earnings and constrain steady long-term cash available for growth.

High Relative Liabilities

Even with lower gross debt, elevated liabilities versus assets leave the company exposed to demand downturns or working-capital stress. High liabilities can tighten covenant headroom, limit funding flexibility for large program investments and increase refinancing risk over a medium-term horizon.

EPS Decline

Steep negative EPS growth reflects prior earnings deterioration or dilution, signaling per-share profitability weakness. Persistently weak EPS growth makes it harder to rebuild shareholder returns and suggests earnings remain vulnerable to operational setbacks or one-off charges over the coming quarters.

Varroc Engineering Limited Business Overview & Revenue Model

Company Description

Varroc Engineering Limited designs, manufactures, and supplies exterior lighting systems, plastic and polymer components, electrical and electronics components, and precision metallic components worldwide. It operates through Automotive and Others segments. The company offers unpainted and painted body parts; exterior and interior systems; seating systems; mirror systems; air filters; automotive accessories; lighting systems; instrument clusters; catalytic converters; switches; motors and magnetos; electronics; traction motors and controllers; DC-DC converters; and engine valves. It also provides precision, forged, and machined parts for engine and transmissions to two-wheeler, three-wheeler, four-wheeler, commercial vehicle, off-highway, earthmoving, and oil drilling application; and transmission gears and assemblies, crankpins, connecting rods, flanges, ring gears, crankshafts, camshafts, knuckles, front axle beams, hydraulic shafts, heavy undercarriage parts, and drill bits and cones, as well as head and signal lamps. The company serves passenger car, commercial vehicle, two-wheeler, three-wheeler, and off-highway vehicle original equipment manufacturers. Varroc Engineering Limited was incorporated in 1988 and is headquartered in Aurangabad, India.

How the Company Makes Money

Varroc Engineering generates revenue primarily through the supply of automotive components to Original Equipment Manufacturers (OEMs) and Tier 1 suppliers. The company's revenue model is based on long-term contracts with automotive manufacturers, which provide a steady income stream. Key revenue streams include sales from exterior and interior plastic components, lighting systems, and electronic components. Additionally, Varroc benefits from its strategic partnerships with major automotive brands, enabling it to secure bulk orders and maintain a competitive edge in pricing and innovation. The company's focus on research and development also allows it to introduce new products and technologies, further enhancing its revenue potential.

Varroc Engineering Limited Financial Statement Overview

Summary

Varroc Engineering Limited has shown a solid recovery in revenue and improved profitability metrics. The balance sheet is strengthening with reduced debt levels and stable equity. Cash flow generation is robust, supporting financial flexibility. However, maintaining net income growth and managing liabilities remain critical.

Income Statement

Varroc Engineering Limited has demonstrated a solid recovery in revenue, growing from 57.85 billion in 2022 to 81.54 billion in 2025. The gross profit margin improved, indicating better cost management. However, fluctuations in net income, with negative figures in the early years and turning positive in later years, suggest potential volatility in profitability. EBITDA margins are stable, reflecting operational efficiency, but net profit margins remain thin, indicating room for improvement.

Balance Sheet

The balance sheet shows a decrease in total debt from 42.55 billion in 2020 to 11.18 billion in 2025, improving the debt-to-equity ratio and reflecting better financial management. Stockholders' equity has stabilized, contributing to a stronger equity ratio. However, overall liabilities remain high relative to assets, posing potential risk if not managed effectively.

Cash Flow

Free cash flow has shown a positive growth trend, with significant improvement from negative figures in earlier years to a robust 4.48 billion in 2025. Operating cash flow consistently exceeds net income, indicating strong cash generation capability. This positive cash flow trajectory supports future investments and debt reduction efforts.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	82.89B	81.54B	75.52B	68.91B	58.44B	43.74B
Gross Profit	28.84B	28.33B	27.15B	23.68B	19.20B	15.30B
EBITDA	7.65B	7.26B	7.02B	5.42B	6.83B	6.28B
Net Income	1.34B	612.30M	5.26B	-8.20B	-11.10B	-6.32B
Balance Sheet
Total Assets	0.00	46.72B	45.60B	46.21B	109.98B	112.25B
Cash, Cash Equivalents and Short-Term Investments	2.01B	2.01B	2.27B	3.57B	1.18B	7.45B
Total Debt	0.00	11.18B	13.90B	18.06B	16.25B	36.95B
Total Liabilities	-15.98B	30.74B	30.34B	36.17B	89.84B	81.69B
Stockholders Equity	15.98B	15.65B	14.97B	9.76B	19.89B	30.28B
Cash Flow
Free Cash Flow	0.00	4.48B	3.64B	880.13M	-2.18B	-3.01B
Operating Cash Flow	0.00	7.37B	6.38B	6.86B	6.36B	4.74B
Investing Cash Flow	0.00	-2.46B	-1.66B	-2.86B	-7.63B	-6.44B
Financing Cash Flow	0.00	-4.90B	-6.64B	-2.16B	-3.35B	-1.52B

Varroc Engineering Limited Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 610.85
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IN:VARROC, the sentiment is Positive. The current price of 610.85 is above the 20-day moving average (MA) of 569.60, above the 50-day MA of 608.95, and above the 200-day MA of 570.90, indicating a neutral trend. The MACD of -14.61 indicates Negative momentum. The RSI at 49.51 is Neutral, neither overbought nor oversold. The STOCH value of 59.45 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for IN:VARROC.

Varroc Engineering Limited Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LUMAXTECH	73 Outperform	₹91.92B	42.73	―	0.35%	36.70%	36.24%
FIEMIND	70 Outperform	₹57.14B	24.02	―	1.24%	16.64%	22.21%
VARROC	69 Neutral	₹87.98B	60.25	―	0.16%	7.38%	-73.62%
SHARDAMOTR	66 Neutral	₹48.78B	14.36	―	2.75%	6.96%	6.33%
SAREGAMA	63 Neutral	₹65.69B	31.18	―	2.59%	26.97%	8.03%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
SUPRAJIT	54 Neutral	₹61.63B	35.89	―	0.63%	14.20%	16.80%

Varroc Engineering Limited Corporate Events

Varroc Engineering Sets February 5 Board Meet to Review Q3 FY 2025-26 Results

Varroc Engineering Limited has announced that its Board of Directors will meet on 5 February 2026 to consider and approve the company’s standalone and consolidated unaudited financial results for the quarter and nine months ended 31 December 2025, along with other business matters. In line with securities regulations, the company has kept its trading window for dealing in its securities closed from 1 January 2026 and will maintain the closure until 48 hours after the results are announced, a move aimed at ensuring compliance with insider trading norms and maintaining market integrity for investors.

Varroc Engineering Launches Voluntary Retirement Scheme for Workmen

Varroc Engineering Limited has launched a Voluntary Retirement Scheme (VRS) for permanent workmen at several of its facilities, structured to be advantageous for both the company and participating employees. The company received 432 applications from eligible workmen and accepted 411 of them, resulting in a total payout obligation of approximately INR 79.94 crore, a move that signals an effort to rationalise its workforce and cost structure while potentially improving operational efficiency over the medium term.

Varroc Engineering Raises Rs 50 Crore via Short-Term Commercial Paper Issue

Varroc Engineering Limited has issued and allotted commercial papers aggregating Rs 50 crore to Kotak Mahindra Bank, marking a short-term fundraising move via the money market. The 26-day instruments, carrying a 6.70% discount rate and a face value of Rs 5 lakh per unit, were issued on January 1, 2026 and will be redeemed on January 27, 2026, with the company now in the process of securing listing approval for these commercial papers on the National Stock Exchange of India, signaling an effort to optimize its short-term liquidity and diversify funding sources.

Varroc Engineering Announces Postal Ballot Results

Varroc Engineering Limited has announced the results of a postal ballot through newspaper advertisements, fulfilling compliance requirements under SEBI regulations. This announcement is part of the company’s ongoing efforts to maintain transparency and adhere to regulatory obligations, potentially impacting its market perception and stakeholder relations.

Varroc Engineering Announces New Director Appointment via Postal Ballot

Varroc Engineering Limited announced the results of a Special Resolution passed through a postal ballot via remote e-voting, which took place between November 14 and December 13, 2025. The resolution involved the appointment of Mr. Avinash Ramdas Chintawar as a Director/Whole Time Director of the company. This move is expected to strengthen the company’s leadership and potentially enhance its strategic direction, impacting its stakeholders positively.

Varroc Engineering Appoints New Director with Shareholder Approval

Varroc Engineering Limited announced the results of a postal ballot where shareholders approved the appointment of Mr. Avinash Ramdas Chintawar as a Director/Whole Time Director of the company. The resolution was passed with an overwhelming majority through remote e-voting, indicating strong shareholder support for the leadership change, which could impact the company’s strategic direction and governance.

Varroc Engineering Confirms New Director Appointment via Postal Ballot

Varroc Engineering Limited announced the results of a postal ballot, confirming the appointment of Mr. Avinash Ramdas Chintawar as a Director/Whole Time Director. The special resolution was passed with a significant majority through remote e-voting, indicating strong shareholder support. This development is expected to impact the company’s leadership structure positively and could enhance its strategic direction.

Varroc Engineering Schedules Investor Conference Call

Varroc Engineering Limited has announced its participation in a conference call with institutional investors and analysts scheduled for December 10, 2025. The meeting will be conducted virtually, and discussions will be based on publicly available information, ensuring no unpublished price sensitive information is shared. This engagement reflects Varroc’s commitment to maintaining transparency and compliance with SEBI regulations, potentially enhancing investor relations and market confidence.

Varroc Engineering to Engage with Institutional Investors in Upcoming Conference Call

Varroc Engineering Limited has announced its participation in a conference call with institutional investors and analysts, scheduled for December 3, 2025, with Motilal Oswal Mutual Fund. The meeting will be conducted virtually, and discussions will be based on publicly available information, ensuring no unpublished price-sensitive information is disclosed. This engagement reflects Varroc’s commitment to maintaining transparency with its stakeholders and adhering to regulatory compliance.

Varroc Engineering Schedules Board Meeting for Financial Results

Varroc Engineering Limited has announced a Board Meeting scheduled for November 12, 2025, to consider and approve the unaudited financial results for the quarter and half-year ended September 30, 2025. The trading window for dealing in the company’s securities has been closed since October 1, 2025, and will remain closed until November 14, 2025, following the announcement of the financial results.

Varroc Engineering Schedules Board Meeting to Review Financial Results

Varroc Engineering Limited has announced a Board Meeting scheduled for November 12, 2025, to review and approve the company’s unaudited financial results for the quarter and half-year ending September 30, 2025. Additionally, the company has implemented a trading window closure from October 1, 2025, to November 14, 2025, to ensure compliance with regulatory requirements, impacting stakeholders’ ability to trade during this period.