Varroc Engineering reports a 29.9% rise in quarterly revenue, driven by significant growth in its EV business, despite facing margin pressures from input costs and labour disruptions.
Varroc Engineering said revenue in its first quarter rose sharply as demand for electric vehicle components and overseas sales continued to improve, even as margins came under pressure from higher input costs, lower-margin tooling work and temporary labour disruption. The auto components maker reported consolidated revenue of ₹26.3 billion, up 29.9% from a year earlier, with India sales climbing 28.6% and overseas revenue advancing 45.6%, according to the company’s earnings call and related analysis by Arthneeti and GuruFocus.
The strongest momentum came from its EV business. Revenue from electric vehicles jumped 87% year on year and accounted for 15.8% of total turnover, reflecting Varroc’s growing position in e-powertrain for two- and three-wheelers. Management also pointed to annualised new business wins of ₹5,991 million, including expanded e-mobility volumes and a lighting contract in Thailand for four-wheelers.
Profitability was more uneven. Earnings before interest, tax, depreciation and amortisation margin fell to 8.5% from 9.5% a year earlier, as the company absorbed the effects of war-linked commodity inflation, which it said reduced margins by about 0.75 percentage points, and higher tooling sales that carried thinner returns. Management said labour issues in April and May weighed on EV powertrain output but added that operations had since normalised.
Despite that squeeze, Varroc said its capital metrics improved, with return on capital employed rising to 24.6% and return on equity to 16.4%. Net debt-to-equity remained manageable at 0.28, giving the company room to fund expansion. Chairman and Managing Director Tarang Jain said the business now expects full-year revenue growth of 20% to 25%, above its earlier mid-to-high teens view, although the company stopped short of issuing formal margin guidance.
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