Varroc Engineering’s (VAR) EBITDA margin stood at 9.2%, down ~80bps YoY (vs. Consensus/I-Sec estimate of 9.8%/9.7%). Revenue growth was ~6% YoY, with ~8% YoY growth in India operations. Overseas operations remained under pressure due to macro weakness. VAR expects a gradual recovery in its overseas business over the next 1–2 years, with recent order wins. We have factored in 12% revenue CAGR over FY25–28E, led by growth in the 2W segment and ramp-up of new order wins.
OutlookWe expect EBITDA margin to improve to ~10.5%/10.7% in FY27E/FY28E. Maintain BUY, with a DCF-based TP of INR 745 (earlier INR 690), implying ~20x FY28E EPS.
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