Varroc Engineering (VARROC) Q4 25/26 earnings summary

Executive summary

• Strong macroeconomic tailwinds in India, robust domestic consumption, and infrastructure investments supported growth across all automotive segments in FY 2026.

• Q4 FY26 revenue reached Rs. 23,681 million, up 12.8% year-over-year, with India operations growing 12% and EV model revenue rising 50% YoY to 14% of total.

• FY26 consolidated revenue was Rs. 88,904.93 million, a 9% YoY increase, with highest ever net new order wins and over 65% related to EV models.

• Net debt reduced by Rs. 2,528 million YoY to Rs. 4,952 million, despite one-time VRS spending and increased working capital.

• Audited standalone and consolidated financial results for FY 2025-26 were approved, with a qualified opinion from auditors due to unresolved arbitration-related income recognition issues.

Financial highlights

• Q4 FY26 EBITDA margin improved to 9.7% from 9.3% QoQ; PBT margin before exceptional and JV profits rose to 4.5%.

• FY26 EBITDA margin was 9.4%, with PBT margin before exceptional and JV profits at 4.3%.

• Standalone net profit for FY 2025-26 was Rs. 2,881.93 million; consolidated net profit was Rs. 2,298.33 million.

• Net debt/equity improved to 0.27 and net debt/EBITDA to 0.54 by end of FY26.

• Dividend of 150% of face value recommended, subject to shareholder approval.

Outlook and guidance

• Expecting mid to high teen revenue growth in FY 2027, driven by a strong order book and overseas business revival.

• Margins in FY 2027 are expected to be higher than FY 2026, with cost pass-through arrangements mitigating inflation impacts.

• Focus on debt reduction, prudent capital deployment, and less capital-intensive investments to drive value compounding.

• The company is seeking shareholder approval for further fund-raising and increased borrowing capacity to support future growth.

• Overseas business ramp-up to continue, with significant CapEx planned for both India and international operations.