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VARROC: Future EV Electronics Deal Will Likely Struggle To Justify Current Pricing

Increasing EV Adoption Will Erode Outdated ICE Segments

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VARROC
AnalystLowTarget
Not Invested
Published 01 Aug 2025

Update shared on 14 Dec 2025

Fair value Increased 15%
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Analysts have raised their fair value estimate for Varroc Engineering from ₹480 to ₹550 per share, reflecting expectations of slightly stronger revenue growth, marginally improved profit margins and a higher justified future earnings multiple.

What's in the News

  • Won a major multi-year supply program with an electric vehicle OEM to provide high-voltage electronics for e-powertrain components, including inverters, onboard chargers, battery management systems and DC DC converters, with peak annual revenue potential of about INR 8,000 million over an 8-year delivery period (Key Developments)
  • Will manufacture the new high-voltage electronics portfolio for the EV partnership from its established facility in Romania, enhancing utilization of its European footprint and reinforcing its position in the global passenger vehicle electronics market (Key Developments)
  • The EV electronics agreement aligns with Varroc's strategy to accelerate growth in electronics, lighting and electric powertrain solutions, supported by ongoing investments in advanced technologies, systems integration and design capabilities for e-mobility and ADAS (Key Developments)
  • Scheduled a Board Meeting on November 12, 2025 to consider and approve unaudited standalone and consolidated financial results for the quarter and half year ended September 30, 2025, and to discuss other business matters (Key Developments)
  • Called a Special or Extraordinary Shareholders Meeting on December 13, 2025 via postal ballot in India to consider the appointment of Avinash Ramdas Chintawar as director or whole-time director (Key Developments)

Valuation Changes

  • The Fair Value Estimate has increased from ₹480 to ₹550 per share, implying a moderate upward revision in the intrinsic value assessment.
  • The Discount Rate has risen slightly from 14.67 percent to 14.97 percent, reflecting a marginally higher required return or risk assumption.
  • Revenue Growth has been nudged up from 9.85 percent to 10.47 percent, indicating a modestly stronger top line outlook.
  • The Net Profit Margin has edged up from 6.05 percent to 6.07 percent, signaling a very small improvement in expected profitability.
  • The future P/E Multiple has increased from 16.55x to 18.47x, suggesting a higher expected valuation for Varroc Engineering's earnings.

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