ICICI Securities Ups Varroc Engineering Target Price to Rs 675

Varroc Engineering Posts Strong Q4FY26 EBITDA Margin, Expects Gradual Recovery

Varroc Engineering (VAR) has reported its financial results for Q4FY26, with its EBITDA margin standing at 9.4%. This margin is in line with the estimates provided by ICICI Securities. The company's revenue growth was 13% year-over-year (YoY), but it fell short of ICICI Securities' estimate of 17% due to a model mix issue in its India business.

However, the company's overseas business reported a robust growth of 24% YoY, indicating a positive trend in the sector. Varroc Engineering expects a gradual ramp-up in its overseas business over the next 1-2 years, backed by strong order wins. ICICI Securities has factored in a 12% revenue Compound Annual Growth Rate (CAGR) over FY26-28E, driven by growth in the two-wheeler (2W) and four-wheeler (4W) segments, as well as a ramp-up in new order wins with anchor and non-anchor customers.

The company's outlook is positive, with e-mobility, human-machine interface (HMI), and lighting segments expected to remain key pillars of growth. ICICI Securities has maintained a BUY rating on Varroc Engineering with a target price of INR 675, down from INR 700. The target price is based on a price-to-earnings (P/E) ratio of 20x for FY28E earnings per share (EPS).

Read also: Market Analysis: Key Stocks to Watch - Narayana Hrudayalaya, ABB India, Federal Bank, Premier Energies, Ather Energy and More

Note: The revenue growth for FY27 and FY28E is not provided in the original content, hence the table only includes the actual revenue growth for FY26.