Varroc Engineer (VARROC)
CyclicalFairStock Score: 42/100 — MIXED
Score breakdown: P/E: 0/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 0/1
Key Financials
| Current Price | ₹847.9 |
| Market Cap | ₹12,955.86 Cr |
| P/E Ratio | 65.78 |
| ROCE | 17.06% |
| ROE | 29.94% |
| Dividend Yield | 0.18% |
| Profit Growth | -26.5% |
| Debt/Equity | 0.51 |
| Sales Growth | 29.9% |
| Promoter Holding | 75% |
| 52-Week Range | ₹462 — ₹895.6 |
| Sector | Auto Components |
| Book Value | ₹116.53 |
Strengths
- Strong ROE of 29.94% and ROCE of 17.06% indicate high capital efficiency
- Debt-to-equity of 0.53 is conservative for an auto components business
- Promoter holding of 75% aligns management with minority shareholders
- Piotroski F-Score of 7/9 suggests improving financial health
- Sales growth of 10.23% shows the business is still expanding
Concerns
- Latest quarter shows a net loss of ₹11 Cr despite sales of ₹2,288 Cr, so profitability is not steady
- Valuation is rich at P/E of 33.25 and P/B of 8.13 against book value of ₹63.29
- Profit growth of 237.27% may be a low-base recovery, not durable compounding
- Dividend yield of only 0.18% offers negligible downside support
AI Analysis
I start by asking what the business does and what I am paying for. Varroc is an auto components maker, an industry I understand but one that is deeply tied to the vehicle cycle. The return on equity of 29.94% and ROCE of 17.06% are impressive, and a debt-to-equity of 0.53 is manageable, not reckless. Promoter holding of 75% also aligns interests. But as Graham used to say, price is what you pay, value is what you get. At ₹514.40, I am paying 33.25 times earnings and 8.13 times book value, while book value is only ₹63.29. That is a high price for a cyclical business. The 237.27% profit growth sounds wonderful, but it comes on a low base and the latest quarter shows a net loss of ₹11 Cr on sales of ₹2,288 Cr. That tells me the earnings power is not yet steady. The Piotroski score of 7/9 suggests financial health has improved, and sales growth of 10.23% is reasonable, but the dividend yield of 0.18% is negligible, so I cannot rely on income while waiting. The market has already cut the stock from its 52-week high of ₹864.90, which reflects uncertainty. A PEG of 0.27 is only meaningful if 237% growth is sustainable, and one losing quarter warns me against that assumption. This looks like a cyclical that may be recovering, not a predictable compounder. I would need a lower price or several quarters of consistent proof before treating it as a margin-of-safety investment.
Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer