Varroc Engineering achieves highest-ever Q2 FY26 revenue post-divestment, driven by strategic growth
Varroc Engineering reported its highest-ever Q2 FY26 consolidated revenue of ₹ 2,207.3 crore, up 6.1% YoY, with improved PBT and ROCE. The company reduced debt and secured significant new business wins.
The announcement of strong financial results, including record revenue, substantial debt reduction, improved profitability metrics, and a clear strategic growth roadmap, is highly material for investors as it signals robust performance and future potential.
The company reported record revenue post-divestment, significant debt reduction, improved PBT margins and ROCE. Management commentary highlights strategic growth pillars, EV portfolio scaling, and substantial new business wins, indicating strong operational and financial health.
* Varroc Engineering Limited announced its unaudited financial results (Consolidated & Standalone) for the quarter and half year ended September 30, 2025. * Consolidated revenue from operations for Q2 FY26 was ₹ 22,073 million (₹ 2,207.3 crore), marking a 6.1% year-on-year growth. * PBT before JV profit for Q2 FY26 stood at ₹ 912 million (₹ 91.2 crore), compared to ₹ 901 million (₹ 90.1 crore) in Q2 FY25. * CMD Mr. Tarang Jain noted the robust growth of the Indian economy (real GDP grew 7.8% in April-June 2025 quarter) and moderating inflation, while acknowledging global uncertainties from rising tariffs and geopolitical tensions. * The company has significantly improved financial prudence, cost reduction, and customer delight post-divestment, reducing Net Debt/EBITDA to below 0.3X (from over 2x in FY23) and interest burden to below 1.5% of revenue. * Gross margins improved by almost 1%, and PBT margin increased from 1.1% to over 4%. * ROCE reached 23.6% in Q2 FY26, up from 12% in FY23. * Over 11% of revenue now comes from supplying to EV customers, reflecting scaled EV product portfolio. * The growth plan is built on three pillars: capitalizing on CASE (Connected, Autonomous, Shared, and Electric) disruption, business portfolio management (e.g., setting up a facility in Thailand instead of China), and exploring adjacencies like aftermarket, exports, and non-auto segments. * Indian operations grew at 7.0%, but consolidated revenue was impacted by an industry-wide rare-earth issue, resulting in a loss of approximately ₹ 750 million (₹ 75 crore) in Q2 FY26. * EBITDA for the quarter was 9.1% (vs 9.7% YoY) due to higher employee costs from a new R&D center established overseas. * India EBITDA and PBT were strong at 11.5% and 7%+ respectively. * Net debt in H1 FY26 was reduced by ₹ 3,680 million (₹ 368 crore), bringing the net debt to equity ratio below 0.22x, with the absolute net debt figure at ₹ 3,800 million (₹ 380 crore). * In H1 FY26, the company secured net new business wins with annualized peak revenues of ₹ 8,928 million (₹ 892.8 crore), including 4W lighting and increased volumes from an existing EV customer. * The company expects a turnaround in overseas electronics, lighting, and forging businesses from H2 FY27 and is confident of winning a High Voltage Electronics business for its Romanian operations by the end of the current calendar year.
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