Varroc Engineer (VARROC)

FairStock Score: 42/100 — MIXED

Score breakdown: P/E: 0/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

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.

The full AI analysis, bull and bear case and key monitorables are in FairStock Pro.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer