Varroc Engineering Ltd

Price story Before the numbers, the tape. A stock price moves through four repeating seasons: a flat base (stage 1), an advance (2), a top (3), a decline (4). Where the price sits in that cycle frames everything below.

Varroc Engineering Ltd trades at ₹679, in a confirmed uptrend and 6 weeks into that stage. That is +16.5% against its own 200-day average. It sits at 100% of a 52-week range of ₹481 to ₹679. On relative strength it has been ahead of the NIFTY 500 on a trailing-13-week view for 19 straight weeks.

Today the stock is in a confirmed uptrend — week 6 of stage 2, confirmed. At ₹679 it trades +16.5% versus its 200-day average and sits at 100% of its 52-week range (₹481–₹679).

Against the market, two honest reads. Cumulative: over the last 8.1 years the stock moved −35% while the NIFTY 500 moved +151% — behind the index over the full window. Recent form: on a trailing-13-week view the stock has been ahead for 19 straight weeks — the ribbon below is that same metric, week by week.

What would end the trend, mechanically: two Friday closes in a row below the 200-day line. That is the exit rule — no debates.

Valuation P/E is the price of ₹1 of annual profit: how many rupees the market pays for each rupee the company earns in a year.

Varroc Engineering Ltd trades at 41.0× P/E, at the pricey end of its own range (72nd percentile). Its long-run median P/E is 18.4×, measured across 8.1 years of weekly readings. This places the multiple against the stock’s own record, and says nothing about what the business is worth.

Today's P/E of 41.0× is at the pricey end of its own range (72nd percentile), against a long-run median of 18.4× measured over 8.1 years of weekly readings. This is a comparison against the stock's own history — not a claim about what it is worth.

Why the multiple sits where it does: over the past year annual EPS moved +267.3% against a +29.8% price move — earnings outran the price, pushing the multiple DOWN its own range.

The price move, decomposed: over 3y, of the +26.0%/yr price move, ~+91.5%/yr came from earnings growth and ~−65.5 pp from the multiple (compressing). The split is the honest approximate (price return minus earnings growth); it makes the rally itself visible instead of hiding it behind the percentile.

Put together: the multiple is full against its own past, so the story rests on the earnings line underneath it, not the multiple.

Stage: Turning around Every business sits somewhere on a fundamental arc, and this page names the spot before anything else. The last twelve quarters of revenue, profit and EPS growth — plus the return the business earns on its capital — are read as curves: Deteriorating (the curves are falling), Turning around (a trough has just formed and the last few quarters lift off it), Improving (the climb off the trough is sustained), Consistent (steadily positive with healthy returns), Topping out (still high but decelerating from the peak). When the curves genuinely disagree the read is Mixed; too little history is No read. CAGR (compound annual growth rate) is the smooth yearly pace that turns the starting value into the latest one — the fairest way to compare growth across different time spans. Read the columns together: if the 1-year number towers over the 10-year, recent growth is running hotter than the long-run trend. A dash means that window is not held, or the base year was a loss (where a growth rate is not meaningful).

Varroc Engineering Ltd reads as turning around on its fundamental arc. Turning around — profit growth swung from −60.3% at the trough to +204.3%, a 3-quarter improving streak (single-quarter readings), ROCE lifting at 21.8%. The read is built from 12 quarters across 3 curves, on partial evidence.

Why it matters: growth inflections are where re-ratings start — the curves say a turn is forming, so the question becomes whether the next quarters confirm it.

One or more growth curves carry a base-effect spike — a large year-on-year move off a near-zero or loss-making comparable quarter. Those spikes are capped before the classifier reads the trajectory, and shown pinned on the chart, so a single distorted quarter does not drive the stage call.

A partial read: at least one curve is short, or the returns curve is not the computed quarterly series — hold the stage word a little more loosely.

4-Factor Sector Score

53.2/100 — rank 11 of 20 in Auto Ancillaries - Diversified · 83% evidence confidence

Varroc Engineering Ltd scores 53.2 out of 100 against the 20 companies it is compared with in Auto Ancillaries - Diversified, ranking 11. Balanced evidence: keep at normal research priority and require another comparable period before raising conviction.

The four contributions add to the total exactly: 17.1 + 11.7 + 15.1 + 9.3 = 53.2. This is the SAME number shown on the sector comparison — it is computed once, for the whole peer set, and read here.

What would change it: The read weakens if profit growth turns negative or margin improvement reverses while sector-relative strength deteriorates.

Revenue Revenue is the top line: everything the company billed its customers in the period.

Varroc Engineering Ltd reported ₹2,368 Cr of revenue in the Mar 26 quarter, +12.8% year on year. That is the 12th straight quarter of year-on-year growth. Over 10 years it has compounded at 1.2% a year. The last full year, FY26, came in at ₹8,890 Cr. The last four reported quarters add to ₹8,891 Cr.

FY26 revenue came in at ₹8,890 Cr (+9.0% on the year), capping 10 years at 1.2% compound. The latest quarter (Mar 26) printed ₹2,368 Cr, +12.8% year on year — the 12th consecutive quarter of year-over-year growth.

Pace check: the last four quarters averaged +9.0% growth against the decade's 1.2% — the current year is running faster than its own long-run rate.

Acceleration check: trailing-twelve-month revenue grew +9.0% over the last 4 quarters against +8.5%/yr over the last 8 — stabilising; TTM profit +227.1% vs −34.4%/yr — accelerating.

Operating margin Operating margin is what is left of every ₹100 of sales after running the business, before interest and tax. It is the cleanest read on pricing power and cost control.

Varroc Engineering Ltd's operating margin is 9.0% in the Mar 26 quarter, −2.0 percentage points against the same quarter a year ago. Across 12 fiscal years the operating margin has ranged 6.0% to 10.0%. The current quarter sits inside that band.

The latest quarter's operating margin is 9.0%, −2.0 pp against the same quarter a year ago. Across 12 fiscal years the operating margin has ranged 6.0%–10.0%.

🚨 Why the margin moved: operating margin went −1.1 pp year on year while gross margin went −0.1 pp — the loss came mostly below the gross line: operating leverage, with costs spread over a bigger revenue base.

Net profit Net profit is what survives every cost, interest and tax — the number EPS, dividends and book value all grow from.

Varroc Engineering Ltd earned ₹70.0 Cr of net profit in the Mar 26 quarter, +204.3% year on year. Full-year FY26 profit was ₹230 Cr. The 10-year compound rate is −4.6%. That is 3.0% of the quarter's revenue. The same quarter a year earlier earned ₹23.0 Cr. 2 of the last 12 reported quarters were loss-making.

Mar 26 profit was ₹70.0 Cr, +204.3% year on year. On the full year, FY26 printed ₹230 Cr (+228.6%), and the 10-year compound rate is −4.6%.

Why profit moved: revenue contributed +12.8% and the margin −2.0 pp — the quarter was revenue-led despite a thinner margin.

Pace comparison, last four quarters: profit +142.5% vs revenue +9.0%. Profit is growing faster than sales — fixed costs are being spread over a bigger base, and each extra rupee of revenue drops more to the bottom line.

Cash flow — the router The P&L says what was earned; the cash-flow statement says what actually arrived. Operating cash flow (CFO) against profit is the cleanest lie detector in the accounts.

Over the last 3 fiscal years 230% of Varroc Engineering Ltd's reported profit arrived as operating cash — the cash follows the profit. In FY26 that was ₹537 Cr of operating cash against ₹230 Cr of profit. After ₹596 Cr of capital spending, ₹−59.0 Cr was left as free cash.

FY26: operating cash of ₹537 Cr against reported profit of ₹230 Cr, leaving free cash of ₹−59.0 Cr after ₹596 Cr of capital spending. Across the last 3 fiscal years the conversion rate is 230% of profit.

Cash-flow readings here are annual — that is the resolution our series carries, so this section moves once a year.

Why conversion sits at 230%: the cash cycle stretched 87 days between FY21 and FY26 — more of each rupee of profit waits inside the cycle before arriving.

Router verdict: no single sink dominates — the next section checks both the working-capital cycle and the capital spending.

Where the cash goes Working capital is the cash tied up between paying suppliers and getting paid: debtor days (customers owe), inventory days (stock waits), and the cash conversion cycle (the whole loop, in days of sales).

Varroc Engineering Ltd's cash conversion cycle runs −8 days in FY26, up from −95 days in FY21. Capital spending ran ₹1,189 Cr over the last 3 years. At FY26 sales of ₹8,890 Cr each day of that cycle holds about ₹24.4 Cr, so roughly ₹−195 Cr sits inside the business at any moment.

FY26: debtors at 30 days, inventory at 60 days — roughly 2.0 months of stock waiting to sell; that is where the cash sits while it waits — for a full cycle of −8 days, looser than FY21's −95.

The full loop: cash goes out to suppliers and production on day 0; stock waits 60 days to sell; customers pay about 30 days after that; and suppliers themselves are paid at 97 days — netting out to the −8-day cycle.

In money terms: at FY26 sales of ₹8,890 Cr, each day of the cycle holds about ₹24.4 Cr — so the −8-day loop keeps roughly ₹−195 Cr sitting inside the business at any moment.

On the investment side: capital spending of ₹1,189 Cr over the last 3 fiscal years against ₹992 Cr of depreciation — building somewhat ahead of wear-and-tear. Capital work-in-progress stands at ₹151 Cr (FY26) — capacity paid for but not yet earning.

The synthesis: neither the cycle nor the build-out is hoarding the cash — the machine is reasonably clean.

Return on capital Return on capital employed (ROCE) is the profit the whole business earns on all the money in it — equity and debt together. It is the single best test of whether growth creates value or just size.

Varroc Engineering Ltd earns a ROCE of 19% in FY26. That is up from a trough of 2% in FY22. Return on invested capital clears the cost of that capital by +2.2 percentage points, so growth here adds value rather than only size. The wiring behind it is 2.6% net margin on 1.83× asset turns.

FY26 ROCE is 19%, recovered from a FY22 trough of 2% — the full ladder below shows the fall and the climb, undoctored.

Why the return is what it is — the wiring (FY26): 2.6% net margin × 1.83× asset turns × 2.73× balance-sheet leverage ≈ 13.0% on equity. Margin does its share; leverage is a meaningful part of the equation.

The capstone test — ROIC − WACC: 14.2% − 12.0% = a +2.2 pp spread. The 12.0% is a standing assumption for the cost of capital in India, not a per-stock estimate — read the sign and the size of the spread, not the decimals. Positive but thin — value creation with little room for error.

Debt Debt-to-equity says how much of the business is funded by borrowings. Low is the safe corner; the trend matters as much as the level.

Varroc Engineering Ltd carries total debt of ₹925 Cr against shareholder equity of ₹1,818 Cr as of Mar 26, a debt-to-equity of 0.51. On the annual view that ratio went from 0.81 in FY22 to 0.51 in FY26. Read the returns elsewhere on this page with that leverage in mind.

Mar 26: total debt of ₹925 Cr against shareholder equity of ₹1,818 Cr — a debt-to-equity of 0.51. On the annual view, debt-to-equity went from 0.81 (FY22) to 0.51 (FY26). Read the returns on this page with that leverage in mind.

Ownership Who owns the stock, quarter by quarter: promoters (the controlling owners), foreign and domestic institutions, and the public. Steady accumulation by people close to the numbers is a signal; a quiet register is also an answer.

Domestic institutions cut 1.6 points of Varroc Engineering Ltd over 8 quarters, the biggest move on the register. That takes domestic institutions to 11.2% of the company. Promoters moved +0.0 points over the same window, to 75.0%. The register is read on the four disclosed classes only; nothing is inferred between filings.

The register over the last two years — Domestic institutions: −1.6 points over 8 quarters to 11.2%; Promoters: +0.0 points over 8 quarters to 75.0%; Foreign institutions: +0.0 points over 8 quarters to 4.3%.

🚨 Why the register moved: domestic institutions drove it (−1.6 points) — distribution into the market’s bid.

Safety line The Z-score estimates how far a company sits from balance-sheet distress — above roughly 3 is safe, below roughly 1.8 is the danger zone. It was built for manufacturers, so it is not applied to banks and lenders.

Varroc Engineering Ltd: the Z-score reads 3.74. A Z-score above roughly 3 reads as safe and below roughly 1.8 as the distress zone, so this sits well clear of distress. It is a distance-to-distress estimate from the balance sheet, not a forecast of failure.

Why it matters: a Z-score of 3.74 sits well clear of the distress zone — the balance sheet is not the risk here.

The safety line in one sentence: the Z-score reads 3.74.

Frequently asked questions