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INVESTMENT INSIGHTS

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 quality company, based on a 10 year financial track record.
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.
Q.4 Is Varroc Engineering Ltd a good buy now?
Varroc Engineering Ltd is a neutral opportunity now, based on stable price trend analysis suggesting prices may move sideways. However, you need to check its quality and valuation before making a decision

Performance Analysis

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% , 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 with its 5 year median of 0.85%, indicating stable margins.
Current Level Historic Median
Gross Profit Margin 7.8 7.8
Operating Profit Margin 9.53 8.66
Net Profit Margin 0.85 0.85
Q.5 Return on Asset of Varroc Engineering Ltd?
Varroc Engineering Ltd Return on Asset is 1.56(x), which is above its 5 year historical median of 0.72(x), indicating improved asset utilization efficiency.
Q.6 Return on Equity (ROE) of Varroc Engineering Ltd?
Varroc Engineering Ltd Return on equity is 4.55% for FY-2025 , which is above its historical median of 2.62%, indicating the business is making better use of its shareholders capital.
Q.7 Return on capital employed (ROCE) of Varroc Engineering Ltd?
Varroc Engineering Ltd Return on capital employed is 13.01% for FY-2025 , which is below its estimated weighted average cost of capital(WACC) 13.5%, indicating value preservation.
Q.8 Cash conversion cycle of Varroc Engineering Ltd?
Varroc Engineering Ltd Cash conversion cycle is -4 , above its historical median of -5 , indicating deteriorated working capital management. However, you need to compare this with its peers in the industry.
Current Level Historic Median
Asset Turnover 1.83 0.89
ROE 4.55 2.62
ROCE 13.01 8.88
Cash Conversion Cycle -4 -5
Q.9 Debt to Equity ratio of Varroc Engineering Ltd?
Varroc Engineering Ltd Debt-to-Equity ratio is 0.61 , which is above with the industry average of 0.4 , 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, indicating the business is able to service its debt comfortably.

Ownership & governance

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)

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 Industry Median
Revenue 8,154.1 492.3
Gross Profit 636 44.4
Operating Profit 775 47
Net Profit 70 23.5
Operating Efficiency
Current Level Industry Median
Asset Turnover 1.83 1.23
ROE 4.55 11.57
ROCE 13.01 13.36
Cash Conversion Cycle -4.49 47

Valuation & price assessment

Q.1 Stock return of Varroc Engineering Ltd over the last decade?
Over the last 9 years, the stock has delivered a CAGR of 0% based on the current price.
Q.2 What return has the stock given over the last decade?
9Y 5Y 3Y 1Y
Share Price - 7.8% 25.2% 27.2%
Q.3 Valuation ratios of Varroc Engineering Ltd vs historical?
The current P/E is higher that its historical median.
Q.4 How do the current valuation ratios measure up against the historic numbers and the current industry numbers?
Valuation Ratios Current Historic Median Industry Median
Price to Earnings 45.67 0.00 39.31
Price to Book 4.81 1.96 2.88
Price to Sales 0.93 0.38 1.29
EV to EBITDA 10.04 17.59 11.85

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