Varroc Engineering (VARROC) Q2 24/25 earnings summary

Executive summary

• Q2 FY25 revenue reached ₹20,808 million, up 10.3% year-over-year, with India business growing 13.4%.

• Profit before tax (PBT) margin improved to 4.4% from 3.9% in Q2 FY24; EBITDA margin was 9.7%.

• Net debt reduced by ₹1,554 million in H1 FY25, now at ₹8,273 million.

• Secured new lifetime orders worth ₹32.48 billion in H1 FY25, with 37% from EV customers.

• Recognized globally for CSR efforts, including Kham River Restoration.

Financial highlights

• Q2 FY25 revenue grew 10.3% YoY to ₹20,808 million; India operations up 13.4%.

• EBITDA margin for Q2 FY25 was 9.7%, slightly down from 9.9% last year.

• PBT margin improved to 4.4% in Q2 FY25 from 3.9% last year; sequential PBT up 62%.

• Net debt reduced to ₹8,273 million by September 2024.

• H1 FY25 revenue was ₹39,796 million, up 7.8% YoY; EBITDA for H1 FY25 was ₹3,734 million.

Outlook and guidance

• Management expects continued growth in two-wheeler, passenger car, and EV segments.

• Revenue growth target is 6%-8% above market growth for FY26, supported by strong order wins.

• Cost reduction initiatives and operating leverage expected to improve margins from Q4 FY25.

• Effective tax rate expected to normalize around 27%.

• Capex to accelerate in H2 FY25 for electronics, EV powertrain, and land acquisition.