Varroc Engineering (VARROC) Q3 24/25 earnings summary

Executive summary

• Q3 FY25 revenue grew 10.1% year-over-year to INR 20,753 million, with India contributing 87-88% and global operations 12-13%.

• EBITDA margin remained flat at 9.2% year-over-year, while PBT margin before exceptional items improved to 3.2% from 2.4% YoY.

• Net debt reduced by INR 1,967 million in nine months, standing at INR 7,860 million as of December 2024.

• Net new lifetime orders in 9M FY25 totaled INR 59.74 billion, with 55-58% from EV customers; Q3 FY25 EV revenue was 10.5% of total.

• Exceptional costs of INR 796.5 million (China JV stake sale) and INR 112.7 million (Varroc Polymer merger) recognized.

Financial highlights

• Q3 FY25 consolidated revenue: INR 20,753 million, up 10.1% year-over-year; EBITDA: INR 1,900 million, up 9.8% YoY.

• PBT before exceptional items: INR 661 million, up 44.7% YoY; PBT margin improved by 77-80 bps YoY.

• Net debt/equity improved to 0.5x; Net debt/EBITDA at ~1x; annualized ROCE at 19.3%.

• Consolidated net loss for Q3 FY25: INR 451.8 million, due to exceptional items.

• EPS (consolidated, continuing operations): (INR 3.10) for Q3 FY25.

Outlook and guidance

• Order book strengthened with net new business wins of INR 10,847 million annualized peak revenue in nine months.

• Over 55% of new order wins are from EV models, with major overseas wins in inverter electronics and ambient lighting for FY27 production.

• Focus on debt reduction, prudent capital deployment, and less capital-intensive investments.

• Cost optimization and restructuring expected to support margin improvement next year.

• Management notes ongoing GST litigation and China JV divestment as key focus areas.