Gear wheels sit in a rack of an automotive component machine at a manufacturing plant. (Photographer: Dhiraj Singh/Bloomberg)

Varroc Engineering Expects Margins To Improve By March

Varroc Engineering Ltd. expects its margins to improve by 40-50 basis points in the ongoing financial year.

The company, which supplies parts to Jaguar Land Rover, Bentley and even Tesla Inc., clocked an operating margin of close to 9 percent in the previous financial year, Chief Financial Officer TR Srinivasan told BloombergQuint in an interaction.

“Indian business already had better margins in the first quarter,” Srinivasan said. “Ebitda (earnings before interest, tax, depreciation and amortisation) margins for India business expanded 40 basis points, driven by the growth in top line.”

Brokerage Citi Research expects Varroc’s both global lighting business and India business to outpace market growth on the back of gains in customer market share overseas and in India. It also initiated a coverage on the stock with a ‘Buy’ rating. Citi expects Varroc’s shares to reach Rs 1,370 levels, implying a potential upside of 21 percent from current levels.

Shares of Varroc Engineering fell as much as 4.9 percent to Rs 1,070 a piece.