1. At a Glance
Varroc Engineering is having one of those “don’t call it a comeback, but also… call it a comeback” moments.
Market cap sits at ₹8,681 Cr, the stock is chilling around ₹568, down ~9% over 3 months but still up ~14% in 6 months. Translation? Market is confused, just like your relatives during a wedding buffet.
Q3 FY26 numbers look solid on the surface: Revenue ₹2,288 Cr (+10.2% YoY), PAT ₹77.9 Cr, and margins holding around 9–10% OPM. ROCE has climbed back to a respectable 17.1%, while ROE is still warming up at 7.37% like an old diesel engine on a winter morning.
Debt has come down sharply to ₹915 Cr, promoter holding is a rock-solid 75% with zero pledge, and EV programs now dominate 63% of the order book. Sounds sexy, right? But before we light fireworks, remember—this is a company that has traumatised long-term shareholders for years.
So the real question: Is Varroc finally out of its Europe hangover and ICE dependency, or is this just one good quarter doing PR work?
2. Introduction
Varroc Engineering is that student who was brilliant in school, messed up badly in college, and is now trying to rebuild their LinkedIn profile with buzzwords like “EV”, “ADAS”, and “high-voltage electronics”.
Founded in 1988 as a captive supplier to Bajaj Auto, Varroc slowly evolved into a global Tier-1 auto component supplier. Somewhere along the way, it decided Europe would be fun. Spoiler alert: it wasn’t. Loss-making overseas lighting operations, massive debt, write-downs, and arbitration disputes followed like unpaid credit card bills.
FY21–FY23 were ugly. Losses, negative ROE, collapsing sales growth, and investor patience tested harder than UPSC prelims.
But FY24 onward, management pulled the emergency brake:
- Sold loss-making European & American 4W lighting business
- Focused back on India (now 89% of revenue)
- Shifted portfolio towards EVs, electronics, and higher-value content
Q3 FY26 shows early signs that the patient is responding to treatment. Not fully cured, but no longer in ICU.
Still, this is Varroc. Trust has to be earned, not assumed.
3. Business Model – WTF Do They Even Do?
At its core, Varroc sells auto components—but not boring nuts-and-bolts stuff. Think more “your car won’t work without us” parts.
Their main verticals:
- Lighting Systems: Headlamps, rear lamps, adaptive beams
- Electronics & EMS: Low-voltage and high-voltage electronics
- Infotainment & Vision: Touchscreens, 360° camera systems
- ADAS & DMS: Driver monitoring, camera-based systems
- E-Mobility: Motors, inverters, controllers, BMS
- Aftermarket & Body Parts
In H1 FY26:
- 2W & 3W = 74% of revenue (hello Bajaj dependency)
- 4W & others = 26%
- Bajaj Auto = 45% of revenue, non-Bajaj = 55%
So yes, customer concentration exists. If Bajaj sneezes, Varroc catches a cold. But EV programs are slowly diversifying this risk.
The real pivot is EVs. EV components have 5–7x higher content per vehicle than ICE. Same car, more electronics, higher margins. That’s the thesis Varroc is betting its future on.
Will it work? Depends on execution. And Varroc’s execution history… let’s just say mixed reviews.
4. Financials Overview
Quarterly Comparison Table (₹ Crore)
| Metric | Latest Qtr (Dec’25) | YoY Qtr (Dec’24) | Prev Qtr (Sep’25) | YoY % | QoQ % |
|---|---|---|---|---|---|
| Revenue | 2,288 | 2,075 | 2,207 | 10.2% | 3.7% |
| EBITDA | 210 | 186 | 203 | 12.9% | 3.4% |
| PAT | -11* | -45 | 63 | NA | NA |
| EPS (₹) | -0.67 | -3.10 | 3.99 | NA | NA |
