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Varroc Engineering Q1 Review - Operational Challenges Remain Sticky: ICICI Securities

Varroc Engineering Q1 Review - Operational Challenges Remain Sticky: ICICI Securities

<div class="paragraphs"><p>A automotive component moves down the assembly line. (Photographer: Daniel Acker/Bloomberg)</p></div>
A automotive component moves down the assembly line. (Photographer: Daniel Acker/Bloomberg)

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

ICICI Securities Report

Varroc Engineering Ltd.’s Q1 FY22 operating performance was a miss on consensus estimates as Ebitda margin came in at 0.6% (down 292 basis points QoQ) and reported profit after tax loss of ~Rs 2.3 billion.

Global lighting business (Varroc Lighting Systems) sales fell 18% QoQ to €220 million as margins further shrunk 210 bps to down 2.8% (impacted by weaker mix and cost escalations).

Challenges to improvement in greenfield plant profitability remains a key concern for Varroc Engineering as the plants continue to be impacted by production issues, higher sourcing costs (e.g. electronics).

India business is expected to recover as domestic lockdowns ease and original equipment manufacturers witness demand improvement.

Click on the attachment to read the full report:

ICICI Securities Varroc Engineering Q1FY22 Results Update.pdf

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