Varroc Engineering Limited Just Reported A Surprise Loss: Here's What Analysts Think Will Happen Next

Last week, you might have seen that Varroc Engineering Limited (NSE:VARROC) released its quarterly result to the market. The early response was not positive, with shares down 6.4% to ₹513 in the past week. Things were not great overall, with a surprise (statutory) loss of ₹3.10 per share on revenues of ₹21b, even though the analysts had been expecting a profit. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Varroc Engineering after the latest results.

Check out our latest analysis for Varroc Engineering

After the latest results, the five analysts covering Varroc Engineering are now predicting revenues of ₹92.0b in 2026. If met, this would reflect a notable 15% improvement in revenue compared to the last 12 months. Per-share earnings are expected to shoot up 295% to ₹25.20. In the lead-up to this report, the analysts had been modelling revenues of ₹93.2b and earnings per share (EPS) of ₹27.83 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 minor downgrade to their earnings per share forecasts.

The consensus price target held steady at ₹560, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Varroc Engineering, with the most bullish analyst valuing it at ₹710 and the most bearish at ₹450 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing stands out from these estimates, which is that Varroc Engineering is forecast to grow faster in the future than it has in the past, with revenues expected to display 11% annualised growth until the end of 2026. If achieved, this would be a much better result than the 9.3% annual decline 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 10% annually. So it looks like Varroc Engineering is expected to grow at about the same rate as 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. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at ₹560, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Varroc Engineering analysts - going out to 2027, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Varroc Engineering (at least 1 which is a bit concerning) , and understanding these should be part of your investment process.

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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.