Earnings Miss: Varroc Engineering Limited Missed EPS By 38% And Analysts Are Revising Their Forecasts

The quarterly results for Varroc Engineering Limited (NSE:VARROC) were released last week, making it a good time to revisit its performance. It looks like a pretty bad result, all things considered. Although revenues of ₹22b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 38% to hit ₹3.99 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

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Following the latest results, Varroc Engineering's five analysts are now forecasting revenues of ₹89.5b in 2026. This would be a satisfactory 6.5% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to soar 146% to ₹22.40. Before this earnings report, the analysts had been forecasting revenues of ₹89.5b and earnings per share (EPS) of ₹23.60 in 2026. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

See our latest analysis for Varroc Engineering

It might be a surprise to learn that the consensus price target was broadly unchanged at ₹646, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Varroc Engineering at ₹750 per share, while the most bearish prices it at ₹550. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Varroc Engineering's past performance and to peers in the same industry. For example, we noticed that Varroc Engineering's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 13% growth to the end of 2026 on an annualised basis. That is well above its historical decline of 5.2% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 9.5% annually. Not only are Varroc Engineering's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at ₹646, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Varroc Engineering. Long-term earnings power is much more important than next year's profits. We have forecasts for Varroc Engineering going out to 2028, and you can see them free on our platform here.

Plus, you should also learn about the 2 warning signs we've spotted with Varroc Engineering .

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.