Varroc Engineering Ltd: From Bajaj’s Backyard to Boardroom Brawls—Can This Auto Ancillary Bounce Back?


1. At a Glance

From making parts for Bajaj to battling arbitration claims, Varroc is a Tier-1 auto component player stuck between a gear shift. It’s leaner, meaner, profitable-ish—and carrying a P/E that screams more Ferrari than Fiat. Is the rebound real?


2. Introduction with Hook

Imagine a mechanic who started fixing scooters in his backyard and suddenly got a global call to design Formula 1 parts—with lawsuits flying in from every direction. That’s Varroc for you.

  • FY25 Revenue: ₹8,154 Cr
  • FY25 Net Profit: ₹70 Cr (from a net loss of ₹817 Cr just two years ago!)
  • Arbitration Drama: $66.4M claim by OPmobility in July 2025

What used to be Bajaj’s loyal sidekick now wants a solo ride—through China exits, Europe exits, and an uncomfortable love-hate with capital markets.


3. Business Model (WTF Do They Even Do?)

Varroc is a global Tier-1 automotive supplier manufacturing components across:

  • Polymer parts (bumpers, dashboards, trims)
  • Electrical systems (electronics, wiring, switches)
  • Metal forging and machining
  • Lighting systems (before the 2022 divestment of VLS Europe/NA biz)

Clients? Bajaj, Royal Enfield, Honda, Yamaha, Hero MotoCorp, and global OEMs. Basically, if it vrooms, Varroc probably made something for it.

Focus areas post-divestment:

  • India-centric operations
  • JV exits and restructuring
  • EV component roadmap (but still early innings)

4. Financials Overview

FYRevenue (₹ Cr)Net Profit (₹ Cr)EPSOPMROCEROE
20225,844-1,107-72.646%2%-5%
20236,891-817-53.668%8%-4%
20247,55253234.4310%17%7%
20258,154704.0110%17.3%7.48%

Narrative:

  • From deep-red losses to a miraculous (somewhat underwhelming) profit recovery.
  • Still battling volatility in other income and arbitration hits.

5. Valuation

CMP: ₹559
TTM EPS: ₹4.01
P/E: 74.6x (yeh kya joke hai?)
Book Value: ₹102
P/B: 5.46x

EduInvesting FV Range:

  • Base case (Avg Auto Ancillary P/E ~30): ₹4 x 30 = ₹120
  • Optimistic rebound + arbitration cleared: ₹8–10 EPS forward × 25–30 P/E = ₹200–₹300
  • P/B basis on 3–4x fair multiple: ₹300–₹400

Fair Value Range: ₹200 – ₹400
(P/E 75x is more Netflix than nuts and bolts, just saying.)


6. What’s Cooking – News, Triggers, Drama

  • Jul 2025: $66.4M arbitration claim by OPmobility (boomerang deal returns?)
  • May 2025: Declared ₹1 dividend, cleared ₹500 Cr debt fundraise
  • Apr 2025: Lost ICC arbitration; had to cough up $4.8M + foreign currency penalties
  • May 2024: Sold JV stake to Beste Motors for ~RMB 310M
  • FY24–25: Clean-up of Europe ops; moving toward India/East-Asia focus

Catalysts:

  • If arbitration blows over and Indian biz delivers margins, sentiment can flip fast
  • EV components ramp-up (if successful)

7. Balance Sheet

MetricFY23FY24FY25
Equity₹15 Cr₹15 Cr₹15 Cr
Reserves₹961 Cr₹1,482 Cr₹1,550 Cr
Borrowings₹1,806 Cr₹1,390 Cr₹1,118 Cr
Total Liabilities₹4,614 Cr₹4,530 Cr₹4,672 Cr
Fixed Assets₹2,051 Cr₹2,027 Cr₹2,019 Cr
Investments₹421 Cr₹530 Cr₹69 Cr
Cash & Equivalents₹22 Cr₹-192 Cr₹0 Cr (basically empty wallet)

Commentary:
Debt’s falling. That’s the good news. The bad news? Investment book looks deflated, and cash flow isn’t exactly rainmaking.


8. Cash Flow – Sab Number Game Hai

FYCFOCFICFFNet CF
2023₹686 Cr₹-448 Cr₹-216 Cr₹22 Cr
2024₹638 Cr₹-166 Cr₹-664 Cr₹-192 Cr
2025₹737 Cr₹-246 Cr₹-490 Cr₹0 Cr

Narrative:
Operationally strong, but capex + financing = consistently sucking cash. Debt funding will have to step in again.


9. Ratios – Sexy or Stressy?

RatioFY23FY24FY25
ROCE8%17%17.3%
ROE-4%7%7.48%
Debt/Equity1.880.940.68
OPM8%10%10%
CCC (days)-12-19-16

Verdict:
Margins climbing, leverage reducing. But efficiency must now translate into EPS. Until then, stock’s running on hope + fumes.


10. P&L Breakdown – Show Me the Money

FYRevenueExpensesOPMPATEPS
2022₹5,844 Cr₹5,484 Cr6%-₹1,107 Cr-₹72.64
2023₹6,891 Cr₹6,316 Cr8%-₹817 Cr-₹53.66
2024₹7,552 Cr₹6,793 Cr10%₹532 Cr₹34.43
2025₹8,154 Cr₹7,365 Cr10%₹70 Cr₹4.01

Trend Check:
Revenue = up
Expenses = contained
Profits = down, but skewed by arbitration & other income hits


11. Peer Comparison

CompanyP/EROCEROEOPMMCap (₹ Cr)
Bosch56.121.1%15.6%12.8%112,813
Uno Minda67.018.8%17.5%11.2%62,565
Schaeffler India64.725.7%19.2%18.4%65,679
Endurance45.318.2%15.5%13.4%37,454
Varroc74.617.3%7.5%10%8,545

Comparison:
Margins? Lower.
Valuation? Higher.
Return ratios? Meh.
But… turnaround potential makes it a bet for the brave.


12. Miscellaneous – Shareholding, Promoters

CategoryMar 2023Mar 2024Jun 2025
Promoters75%75%75%
FIIs5.04%3.92%3.99%
DIIs12.02%12.79%13.03%
Public7.94%8.30%7.99%
Shareholders87K95K91K

Commentary:
Promoters steady at 75%. FIIs chilled out. Retail hasn’t fled—yet. Stability ≠ confidence, though.


13. EduInvesting Verdict™

Varroc is like a motorcycle with fresh tyres, a full tank, but the occasional engine knock. The turnaround is real—but so are the ghosts of past global misadventures and the lawsuits that still haunt.

What we like:

  • Leaner post-divestment avatar
  • India manufacturing focus
  • Operating leverage kicking in

What we fear:

  • That scary P/E
  • Another arbitration surprise
  • Weak earnings-to-market-cap ratio

If you’re betting on India’s two-wheeler + EV evolution—Varroc’s in the pit crew. But if you’re allergic to litigation and lopsided valuations… maybe wait till the race settles.


Metadata
– Written by EduInvesting | 19 July 2025
– Tags: Varroc, AutoAncillaries, TurnaroundStocks, ArbitrationDrama, EduInvestingPremium

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