Varroc Engineering Ltd Q2FY26 – From Bajaj’s Garage Buddy to Global Auto Powerhouse: How ₹8,409 Cr Sales & ₹61 Cr PAT Tell the Story of an Indian Auto Comeback Machine
1. At a Glance
Varroc Engineering Ltd (VEL), the Aurangabad-based flagship of the Varroc Group, has gone from making nuts and bolts for Bajaj Auto to engineering complex components for electric and global OEMs. The company posted consolidated revenue of ₹2,207 crore in Q2FY26, up 6.1% YoY, and a PAT of ₹61 crore, a 9.5% YoY rise — modest, but remarkable for a firm that once had to sell off loss-making Europe ops to survive. Its EBITDA margin stood at 9.1%, with a market cap now crossing ₹10,000 crore, a 21% surge in just 3 months.
Trading at ₹659/share, Varroc’s P/E of 51.9x might raise eyebrows, but it’s backed by a recovering ROCE of 17.1% and ROE of 7.4%, indicating that this ex-Bajaj captive unit has finally learned how to use its toolkit for profit. From an industry laggard to a smart survivor, Varroc’s latest results show it’s no longer just a parts supplier — it’s the quiet mechanic behind India’s EV transition.
2. Introduction
Varroc Engineering’s journey feels like a Bollywood redemption arc — complete with betrayal (European divestment), renewal (EV wins), and an ambitious sequel (₹87 billion lifetime orders). Founded in 1988 as a humble parts supplier for Bajaj Auto, Varroc now manufactures and supplies complex auto components — lighting, polymers, electronics, and metal parts — to everyone from Hero to Rivian and Land Rover.
For years, Varroc was that talented student who joined the wrong coaching class. Its European lighting business was a money pit — high-tech, high hopes, but zero margins. After selling that segment for a discounted €54.5 million, the company took a ₹1,353 crore write-off in FY24 (ouch) — but that pain cleaned its books faster than a GST raid.
Today, 87% of its revenue comes from India, proving the prodigal son has come home, leaner and meaner. Its EV exposure has risen to 43% of engine business, and 40% of new orders are EV-related. Bajaj Auto still accounts for 42% of sales, but Varroc is no longer dependent on one sugar daddy — diversification across KTM, TVS, Tata, and Ford is finally paying off.
3. Business Model – WTF Do They Even Do?
Varroc isn’t making flashy cars; it’s making the bones of those cars. The company is a Tier-1 automotive component supplier, which means it sits right next to the OEM throne — not glamorous like Maruti or Tata, but necessary, like the pit crew during an F1 race.
Here’s what they make:
Electrical & Electronics (38% of revenue) – From ECUs to wiring harnesses and lighting electronics, Varroc’s tech quietly powers two-wheelers, three-wheelers, and passenger vehicles.
Polymer components (32%) – Think bumpers, trims, dashboards — the plastic that makes a car look less like a skeleton.
Metallic components (12%) – Precision-forged and machined parts for engines and transmissions — basically the gym workout of vehicles.
Aftermarket (8%) – Replacement parts business; small but high-margin, like a service center’s gold mine.
Lighting & Electronics Overseas (7%) – What’s left of the global business after the Europe exit.
In FY24, two and three-wheelers made up a hefty 75% of sales, but that’s where Varroc’s strength lies — India’s two-wheeler market is an unstoppable tsunami. With 39 plants across 8 countries, 7 tech centers, and over 100 patents, Varroc is basically that overachieving cousin who never stops tinkering with bikes.
