Varroc Engineering Q2 FY27 Results Analysis: Reported PAT Falls 46%, Revenue Jumps 34%

Cofacto Research Published November 04, 2026 4 min read

Neutral

Varroc Engineering Ltd's Q2 FY27 numbers came in mixed, with revenue of Rs. 2,947.93 Cr (+33.55% YoY) and PAT growth of -46.14% YoY. Here's a quick read of what worked, what to watch, and what management said.

Quick Details

Results date	November 04, 2026
Revenue (Q2)	Rs. 2,947.93 Cr (+33.55% YoY)
PAT (Q2)	Rs. 32.83 Cr (-46.14% YoY)
EBITDA margin	8.72% (-48 bps YoY)
EPS (Q2)	Rs. 2.15 (-46.11% YoY)

Quarter Snapshot

Revenue grew 33.55% YoY with normalized PAT up 52.65% YoY, but reported PAT fell 46.14% due to the Rs.63.10 Cr Italy exceptional and an ETR spike to 56.87%. The margin-recovery guidance was only partially delivered (~30 bps QoQ vs the targeted 50 bps), and the working-capital build left H1 free cash flow at Rs.(0.84) Cr. FY27 revenue guidance remains on track, while the margin and zero-debt legs are the binding constraints into H2.

Q2 FY27 Expectations vs Results

Driver	Expected before results	What happened	Verdict
Revenue "ahead" (SIAM 2W +15.2%/3W +23.6% YoY, record EV retails)	Strong volume input	Revenue +33.55% YoY, +11.91% QoQ	Played out
Margins "flat-to-expanding only if pass-through sticks"	QoQ recovery; commodity basket the swing factor	Margin +30 bps QoQ to 8.72% but −48 bps YoY; material cost 67.96% of revenue vs 64.03% Q1	Partially
Watch: Q2 margin bridge (50 bps + Rs.70 Cr tooling recovery)	Evidence of recovery	~+30 bps QoQ; company-basis OPM 5.85% vs 5.26%; not back above 9.2% YoY	Partially
Watch: traction-motor SOP / EV mix > 15.8%	Advance	Not addressed in the filing — remains open for the call	Not observable
Watch: Italy provision ahead of Jan 2027	Any provision quantified	Rs.49.39 Cr provision + Rs.13.72 Cr tax settlement booked	Played out
Watch: working-capital build	Possible drag	Inventories/receivables sharply up; FCF ≈ 0	Played out
Watch: capex run-rate	Advance toward Rs.500–550 Cr	H1 Rs.350.65 Cr	Played out
Watch: OPmobility/Romania arbitration updates	Update	No movement disclosed; no provision	Not observable

Read our full results preview.

Management Guidance vs Delivery

What management said	Where	What happened	Verdict
Recover most of 50 bps margin under-recovery + one-timers in Q2	Q1 FY27 call	Pre-exc EBITDA margin 8.72% vs 8.42% Q1 (~+30 bps); below Q2FY26 9.20%	Partially met
FY27 organic growth 20–25%	Q1 FY27 call	H1 revenue +31.81% YoY	On Track
FY27 revenue > Rs.10,500 Cr	Q1 FY27 call / AGM	H1 Rs.5,582.16 Cr; H2 needs Rs.4,917.84 Cr (< H1 run-rate)	On Track
FY27 margins higher than FY26 (~9.4%)	Q1 FY27 call	H1 pre-exc EBITDA margin 8.58% vs FY26 9.39%	Stretch
FY27 capex Rs.500–550 Cr	Q1 FY27 call / AGM	H1 Rs.350.65 Cr	On Track
Romania electronics EBITDA breakeven	Q1 FY27 call	Not disclosed in the Q2 filing	Too Early
Zero debt by FY28	Q1 FY27 call / AGM	Net debt Rs.601.93 Cr vs Rs.556.86 Cr at Mar-26	Stretch

Key Investment Insights

Key Positives

Consolidated revenue grew 33.55% YoY and 11.91% QoQ to Rs.2,947.93 Cr; H1 FY27 revenue Rs.5,582.16 Cr, +31.81% YoY
Normalized PBT grew 52.89% YoY to Rs.140.69 Cr and normalized PAT Rs.96.57 Cr, +52.65% YoY and +24.28% QoQ, after adding back the Rs.63.10 Cr exceptional
Pre-exceptional EBITDA rose 26.69% YoY and 15.88% QoQ to Rs.257.13 Cr with margin up ~30 bps QoQ to 8.72%
Automotive pre-exceptional segment result Rs.173.12 Cr, +33.45% YoY, at a 6.03% margin vs 6.01% a year ago on a much larger revenue base
Others segment (forging/off-road) revenue +56.07% YoY with loss narrowed to Rs.(4.59) Cr from Rs.(9.95) Cr a year ago
Standalone PAT +75.56% YoY (EPS Rs.7.77 vs Rs.4.43) with standalone EBITDA margin 9.18% vs 8.90% a year ago
Company-defined operating margin (Reg-52) improved to 5.85% from 5.26% QoQ and 5.40% YoY
FY27 revenue guidance of >Rs.10,500 Cr on track: H2 needs only Rs.4,917.84 Cr, below the H1 run-rate

Risk Factors

Reported PAT attributable to owners fell 46.14% YoY to Rs.32.83 Cr on the Rs.63.10 Cr exceptional charge and tax spike
Material cost ratio worsened to 67.96% of revenue vs 64.03% in Q1 FY27 and 64.92% in Q2 FY26; EBITDA margin remains 48 bps below the year-ago 9.20%
Effective tax rate spiked to 56.87% with current tax of Rs.42.11 Cr vs Rs.3.89 Cr YoY — a structural cash-tax normalization headwind
H1 FY27 free cash flow was Rs.(0.84) Cr as inventories (+Rs.206.05 Cr) and receivables (+Rs.273.33 Cr) build consumed operating cash
Net debt rose to Rs.601.93 Cr from Rs.556.86 Cr at Mar-26, moving the FY28 zero-debt target further away
Qualified audit conclusions repeated on both standalone and consolidated statements over Rs.20.99 Cr (standalone) of prior-period China JV revenue; OPmobility arbitration claim of US$66.41 mn outstanding with no provision