Check Before You Invest : Varroc Engineering Ltd

Q: Which industry/sub-sector does Varroc Engineering Ltd belong to?

Varroc Engineering Ltd belongs to the Automobiles sector, operating specifically within the Auto Ancillary segment.

Q: Is Varroc Engineering Ltd a good quality company?

Varroc Engineering Ltd is a average quality company, based on a somewhat consistent multi-year financial track record. This assessment is based on company’s performance on Revenue growth, ROCE, Equity and Assets, key margin ratios, cash conversion cycle, and debt to cash flow from operations and how it compares with its long term averages.

Q: Is Varroc Engineering Ltd undervalued or overvalued?

Varroc Engineering Ltd appears Fair, as its key valuation ratios are in line with their past averages. Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more. Valuation Ratios. Price to Earnings, Current: 48.58, Historic Median: -. Price to Book, Current: 5.12, Historic Median: 5.24. Price to Sales, Current: 0.99, Historic Median: 1.00. EV to EBITDA, Current: 10.65, Historic Median: 11.78

Q: Is Varroc Engineering Ltd a good buy now?

Varroc Engineering Ltd is a good buy now, based on strong price trend analysis suggesting prices may rise. However, you need to check its quality and valuation before making a decision

Q: Revenue growth of Varroc Engineering Ltd?

Varroc Engineering Ltd revenue growth is 8% for FY-2025, which is above its 5-year CAGR of -6.02%, indicating faster growth.

Q: Gross Profit margin of Varroc Engineering Ltd?

Varroc Engineering Ltd Gross profit margin which is the profit after deduction of direct costs, is 7.8% for FY-2025, which is in line with its 5-year median of 7.8%, indicating stable margins.

Q: Operating Profit Margin of Varroc Engineering Ltd?

Varroc Engineering Ltd Operating Profit Margin which is the profit after deduction of all operating costs, is 9.53% for FY-2025, which is above its 5-year median of 8.66% indicating increasing margins.

Q: Net Profit Margin of Varroc Engineering Ltd?

Varroc Engineering Ltd Net Profit Margin is 0.85% for FY-2025, is in line with its 5-year median of 0.85%, indicating stable margins. Profitability Metrics. Gross Profit Margin (%), Current: 7.8, Historic Median: 7.8. Operating Profit Margin (%), Current: 9.53, Historic Median: 8.66. Net Profit Margin (%), Current: 0.85, Historic Median: 0.85

Q: Return on Asset of Varroc Engineering Ltd?

Varroc Engineering Ltd Return on Asset is 1.56%, which is above its 5-year historical median of 0.72%, indicating improved asset utilization efficiency.

Q: Return on capital employed (ROCE) of Varroc Engineering Ltd?

Varroc Engineering Ltd Return on capital employed is 13.01% for FY-2025, which is above its 5-year historical median of 8.88%. The current ROCE is below its estimated weighted average cost of capital (WACC) of 13.5%, indicating value preservation.

Check Before You Invest : Varroc Engineering Ltd

BSE: 541578 NSE: VARROC ISIN: INE665L01035

| Sector: Automobiles | Industry: Auto Ancillary

Snapshot

Q.1 Which industry/sub-sector does Varroc Engineering Ltd belong to?

Varroc Engineering Ltd belongs to the Automobiles sector, operating specifically within the Auto Ancillary segment.

Q.2 Is Varroc Engineering Ltd a good quality company?

Varroc Engineering Ltd is a average quality company, based on a somewhat consistent multi-year financial track record.

This assessment is based on company’s performance on Revenue growth, ROCE, Equity and Assets, key margin ratios, cash conversion cycle, and debt to cash flow from operations and how it compares with its long term averages.

Q.3 Is Varroc Engineering Ltd undervalued or overvalued?

Varroc Engineering Ltd appears Fair, as its key valuation ratios are in line with their past averages.

Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more.

Valuation Ratios	Current	5-year Historic Median
Price to Earnings	48.58	-
Price to Book	5.12	5.24
Price to Sales	0.99	1.00
EV to EBITDA	10.65	11.78

Q.4 Is Varroc Engineering Ltd a good buy now?

Varroc Engineering Ltd is a good buy now, based on strong price trend analysis suggesting prices may rise. However, you need to check its quality and valuation before making a decision

Performance Analysis

We have analysed the performance of the company on the following:

How has it performed on generating Profits?
By checking its Revenue growth, Gross, Operating and Net Margins compared to its last 5-year median.
How efficiently has it utilized Capital?
By checking its ROCE, ROA, ROE and its Cash Conversion Cycle.
How is it managing its Debt?
By checking its Debt to Equity and Cash Flow from Operations.

A: What are the trends in revenue and profit margins?

Q.1 Revenue growth of Varroc Engineering Ltd?

Varroc Engineering Ltd revenue growth is 8% for FY-2025, which is above its 5-year CAGR of -6.02%, indicating faster growth.

Q.2 Gross Profit margin of Varroc Engineering Ltd?

Varroc Engineering Ltd Gross profit margin which is the profit after deduction of direct costs, is 7.8% for FY-2025, which is in line with its 5-year median of 7.8%, indicating stable margins.

Q.3 Operating Profit Margin of Varroc Engineering Ltd?

Varroc Engineering Ltd Operating Profit Margin which is the profit after deduction of all operating costs, is 9.53% for FY-2025, which is above its 5-year median of 8.66% indicating increasing margins.

Q.4 Net Profit Margin of Varroc Engineering Ltd?

Varroc Engineering Ltd Net Profit Margin is 0.85% for FY-2025, is in line with its 5-year median of 0.85%, indicating stable margins.

	Current Level	5-year Historic Median
Gross Profit Margin (%)	7.8	7.8
Operating Profit Margin (%)	9.53	8.66
Net Profit Margin (%)	0.85	0.85

B: Does the business utilize capital efficiently?

Q.5 Return on Asset of Varroc Engineering Ltd?

Varroc Engineering Ltd Return on Asset is 1.56%, which is above its 5-year historical median of 0.72%, indicating improved asset utilization efficiency.

Q.6 Return on capital employed (ROCE) of Varroc Engineering Ltd?

Varroc Engineering Ltd Return on capital employed is 13.01% for FY-2025, which is above its 5-year historical median of 8.88%. The current ROCE is below its estimated weighted average cost of capital (WACC) of 13.5%, indicating value preservation.

Q.7 Return on Equity (ROE) of Varroc Engineering Ltd?

Varroc Engineering Ltd Return on equity is 4.55% for FY-2025, which is above its 5-year historical median of 2.62%, indicating the business is making better use of its shareholders capital.

Q.8 Cash conversion cycle of Varroc Engineering Ltd?

Varroc Engineering Ltd Cash conversion cycle is -4 days, above its 5-year historical median of -5 days, indicating deteriorated working capital management. However, you need to compare this with its peers in the industry.

	Current Level	5-year Historic Median
Asset Turnover (x)	1.83	0.89
ROE (%)	4.55	2.62
ROCE (%)	13.01	8.88
Cash Conversion Cycle	-4 days	-5 days

C: How much debt does the business have and is it at a sustainable level?

Q.9 Debt to Equity ratio of Varroc Engineering Ltd?

Varroc Engineering Ltd Debt-to-Equity ratio is 0.61, which is above the industry average of 0.40, indicating higher debt levels in the industry.

Q.10 Debt to cash flow from operations of Varroc Engineering Ltd?

Varroc Engineering Ltd Debt to cash flow from operations is 1.29, which is at a healthy level.

Ownership & governance

D: Promoter shareholding and pledge status of Varroc Engineering Ltd?

Q.1 Promoter shareholding and pledge status of Varroc Engineering Ltd?

Promoters hold 75.00% of the Varroc Engineering Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

E: How does Varroc Engineering Ltd performance compare with that of its Peers?

Q.1 Revenue growth of Varroc Engineering Ltd vs industry peers?

Varroc Engineering Ltd revenue CAGR is -6.02%, compared to the industry median CAGR of 11.82%, indicating slower growth and losing its market share.

Profit Metrics

	Current Level	5-year Industry Median
Revenue Growth (%)	8	11.8
Gross Profit Growth (%)	4.8	16.3
Operating Profit Growth (%)	2.5	14.9
Net Profit Growth (%)	-87.3	20.2

Operating Efficiency

	Current Level	5-year Industry Median
Asset Turnover (x)	1.83	1.23
ROE (%)	4.55	11.57
ROCE (%)	13.01	13.36
Cash Conversion Cycle (days)	-4.49	47

Valuation & price assessment

Q.1 Stock return of Varroc Engineering Ltd over the last decade?

Over the last 5 year(s), the stock has delivered a CAGR of 7.94% based on the current price.

	9Y	5Y	3Y	1Y
Share Price CAGR	-	7.9%	25.2%	21.5%

Q.2 Valuation ratios of Varroc Engineering Ltd vs historical?

The current P/E ratio of 48.58 is higher than its historical median of , indicating that the stock is trading above its historical average valuation.

Q.3 How do the current valuation ratios compare with 5-year historical median and industry numbers?

Valuation Ratios	Current	5-year Historic Median	5-year Industry Median
Price to Earnings	48.58	-	28.71
Price to Book	5.12	5.24	2.99
Price to Sales	0.99	1.00	1.35
EV to EBITDA	10.65	11.78	11.85

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Check Before You Invest : Varroc Engineering Ltd

Snapshot

Performance Analysis

Ownership & governance

Peer comparison (industry-wise, mcap)

Profit Metrics

Operating Efficiency

Valuation & price assessment

Check more companies

Check trending companies

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