BQ Prime’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 BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
ICICI Securities Report
Varroc Engineering Ltd.’s Ebitdam for Q2 FY24 stood at 10.3%, up ~80 basis points QoQ, and 70 bps higher than consensus estimate though revenue was in line. Varroc Engineering is operating at ~60-65% capacity utilisation, with margin improvement ahead being driven by operating leverage and focus on fixed cost/gross margin.
New lifetime order win in H1 FY24 was Rs 36 billion – with split of 23% / 77% in four wheeler / (two-wheeler and three-wheeler) segments. We have factored-in 13% revenue compound annual growth rate for FY23-FY25E.
Post ~40% rally in the stock price in the last three months, we downgrade Varroc Engineering to 'Add' from 'Buy' with a revised discounted cash flow-based target price of Rs 529 (earlier: Rs 406), implying ~20 times FY25E EPS.
Change in target price is led by 13% increase in FY25E EPS on the back of 75 bps higher Ebitdam, earnings rollover and better free cash flow outlook with a focus on capex management.
Click on the attachment to read the full report:
Also Read: Info Edge Q2 Results Review - IT Weakness To Drag Naukri’s Performance In FY24E: Motilal Oswal
DISCLAIMER
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
RECOMMENDED FOR YOU
![](https://images.assettype.com/bloombergquint/2024-09-02/i4rvg6mo/_1x_1.jpg?rect=0%2C0%2C3500%2C1969&auto=format%2Ccompress&format=webp&w=75)
ICICI Prudential AMC Sells India Sovereign Bonds To Buy Credit
![timelogo](/images/amp-time.png)
![](https://images.assettype.com/bloombergquint/2024-08-20/xi6x338b/Single core and multi core flexible cables manufactured by KEI Industries Ltd. (Source Company website)..png?rect=0%2C0%2C3500%2C1969&auto=format%2Ccompress&format=webp&w=75)
KEI Industries Gains As UBS Initiates 'Buy' With Over 40% Upside
![timelogo](/images/amp-time.png)
![](https://images.assettype.com/bloombergquint/2022-11/5636107b-e858-40aa-bcce-cd5eb40db7bf/Upset_forging_machininig_line_at_Varroc_Engineering_Ltd___Source_Company_website_.png?rect=0%2C0%2C3500%2C1969&auto=format%2Ccompress&format=webp&w=75)
Varroc Engineering Q1 Review - Sub-10% Ebitda Margin Trend Continues; Downgrade To Hold: ICICI Securities
![timelogo](/images/amp-time.png)
![](https://images.assettype.com/bloombergquint/2023-01/9545c2b8-8096-45fc-824c-6b8bb1bda67d/Wires_and_cables_manufactured_by_KEI_Industries_Ltd___Source_Company_website_.png?rect=0%2C0%2C3500%2C1969&auto=format%2Ccompress&format=webp&w=75)
KEI Industries Q1 Results Review - Strong, Inline; Robust Outlook Intact: Systematix
![timelogo](/images/amp-time.png)