Varroc Engineering (VARROC) Q2 25/26 earnings summary

Executive summary

• Q2 FY26 consolidated revenue reached INR 22.7 billion, up 6.1% YoY, with India operations growing 7–7.9% despite rare earth supply issues impacting revenue by INR 750 million or ~4%.

• EBITDA margin for Q2 FY26 was 9.1% (vs. 9.7% YoY), impacted by higher tool sales and increased R&D costs.

• Net debt reduced to INR 3,800 million by Q2 FY26, with net debt to equity at 0.22 and net debt to EBITDA below 0.3x.

• Over 63% of new business wins in H1 FY26 were related to EVs, with EV revenue share at 11%.

• Over 14 new patents filed in H1 FY26, total now exceeds 130.

Financial highlights

• Q2 FY26 consolidated revenue was INR 22.7 billion, up 6.1% YoY; India operations up 7–7.9%, overseas down 18–18.4%.

• EBITDA margin at 9.1% (vs. 9.7% YoY); PBT at 4.1% (vs. 4.3% YoY); PAT for Q2 FY26 was INR 633 million.

• H1 FY26 revenue was INR 42.35 billion, up 6.4% YoY; EBITDA margin at 9.3%; PBT at 4%.

• Net debt reduced by INR 3,680 million in H1 FY26; net capex spend was INR 1,860 million.

• Exceptional gain of INR 612 million from disposal of China JV investment in H1 FY26.

Outlook and guidance

• Increased R&D investment, especially in China, focusing on lighting, ADAS, and intelligent cockpit for future growth.

• Overseas electronics and lighting businesses expected to turn around from H2 FY27, with significant new business wins anticipated.

• CapEx for FY26 expected to be higher than previously guided, with normalization in FY27.

• Ambition to double revenue by 2030 and achieve PBT above 10%.