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
| FY | Revenue (₹ Cr) | Net Profit (₹ Cr) | EPS | OPM | ROCE | ROE |
|---|---|---|---|---|---|---|
| 2022 | 5,844 | -1,107 | -72.64 | 6% | 2% | -5% |
| 2023 | 6,891 | -817 | -53.66 | 8% | 8% | -4% |
| 2024 | 7,552 | 532 | 34.43 | 10% | 17% | 7% |
| 2025 | 8,154 | 70 | 4.01 | 10% | 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
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| 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
| FY | CFO | CFI | CFF | Net 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?
| Ratio | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROCE | 8% | 17% | 17.3% |
| ROE | -4% | 7% | 7.48% |
| Debt/Equity | 1.88 | 0.94 | 0.68 |
| OPM | 8% | 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
| FY | Revenue | Expenses | OPM | PAT | EPS |
|---|---|---|---|---|---|
| 2022 | ₹5,844 Cr | ₹5,484 Cr | 6% | -₹1,107 Cr | -₹72.64 |
| 2023 | ₹6,891 Cr | ₹6,316 Cr | 8% | -₹817 Cr | -₹53.66 |
| 2024 | ₹7,552 Cr | ₹6,793 Cr | 10% | ₹532 Cr | ₹34.43 |
| 2025 | ₹8,154 Cr | ₹7,365 Cr | 10% | ₹70 Cr | ₹4.01 |
Trend Check:
Revenue = up
Expenses = contained
Profits = down, but skewed by arbitration & other income hits
11. Peer Comparison
| Company | P/E | ROCE | ROE | OPM | MCap (₹ Cr) |
|---|---|---|---|---|---|
| Bosch | 56.1 | 21.1% | 15.6% | 12.8% | 112,813 |
| Uno Minda | 67.0 | 18.8% | 17.5% | 11.2% | 62,565 |
| Schaeffler India | 64.7 | 25.7% | 19.2% | 18.4% | 65,679 |
| Endurance | 45.3 | 18.2% | 15.5% | 13.4% | 37,454 |
| Varroc | 74.6 | 17.3% | 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
| Category | Mar 2023 | Mar 2024 | Jun 2025 |
|---|---|---|---|
| Promoters | 75% | 75% | 75% |
| FIIs | 5.04% | 3.92% | 3.99% |
| DIIs | 12.02% | 12.79% | 13.03% |
| Public | 7.94% | 8.30% | 7.99% |
| Shareholders | 87K | 95K | 91K |
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
