Varroc Engineering tumbles 11% on weak March quarter results

The company's global (Ex China) passenger vehicle volumes in Q4FY21 declined mainly due to severe semi-conductor shortages

Shares of Varroc Engineering dipped 11 per cent to Rs 387.30 on the BSE in intra-day trade on Monday after the company reported a weak set of number for the March quarter of FY21 with a consolidated loss of Rs 144 crore, due to weak operational performance of the Global Lighting Business (VLS). The auto ancilaliry company had posted loss of Rs 137 crore in Q4FY20.

The company’s reported revenue from operations grew 32 per cent year on year (YoY) to Rs 3,619 crore against Rs 2,745 crore in the corresponding quarter of previous fiscal. EBITDA (earnings before interest, taxes, depreciation, and amortisation) margin contracted 70 basis points (bps) at 3.5 per cent from 4.2 per cent in the year-ago quarter.

“Consolidated EBITDA for the quarter at Rs 127.5 crore increased by 11 per cent YoY; India EBITDA margins improved by 360 bps while VLS EBITDA margins were adversely impacted mainly by Semi-conductor shortages and poor revenue mix,” Varroc Engineering said.

The company further said it launched Project RACE (Rapid Achievement of Competitive Edge) to bring VLS EBIT level in line with industry benchmarks with the support of a global consulting firm. The benefits of this project are expected to be visible over the next 12-18 months.

The management said the company has seen a strong recovery in Two-wheeler and Passenger Vehicle volumes across in India in Q4FY21. The global (Ex China) passenger vehicle volumes in Q4FY21 declined mainly due to severe semi-conductor shortages. As the current demand for chips is continuing to outstrip supply, suppliers are adding capacities. This additional capacity is expected to help meet auto sector demand starting end of Q2 FY22, it said.

The group designs, manufactures and supplies exterior lighting systems, plastic and polymer components, electricals-electronics components, and precision metallic components to passenger car, commercial vehicle, two-wheeler, three-wheeler and off-highway vehicle OEMs directly worldwide.

At 09:55 am, the stock was down 10 per cent to Rs 391 on the BSE, as compared to 0.02 per cent rise in the S&P BSE Sensex. A combined 540,000 shares have chnaged hands on the counter on the NSE and BSE, so far.