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% and strong performance in two- and three-wheeler segments.

• Profit before tax (PBT) margin improved to 4.4% in Q2 FY25, driven by positive operating leverage in India; EBITDA margin at 9.7%.

• Net debt reduced by ₹1,554 million in H1 FY25, standing at ₹8,273 million, with net debt to equity at 0.5x and annualized ROCE at 19%.

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

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

Financial highlights

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

• Q2 FY25 PBT margin at 4.4%, up from 3.9% last year; EBITDA margin at 9.7%.

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

• Net debt reduced to ₹8,273 million by September 2024; net debt to EBITDA at 1.11x.

• CAPEX in H1 FY25 was ₹1,030 million, with full-year guidance raised to ₹2,600–2,700 million.

Outlook and guidance

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

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

• Revenue growth target is 6–8% above market growth, with new business wins supporting this outlook.

• Effective tax rate expected to normalize around 27% going forward.

• Net debt targeted at ₹7,000–7,500 million by year-end, funded through internal cash generation.