Varroc Engineering bags Rs 3,602 crore order, adds three new EV customers

Varroc Engineering, a Tier 1 automotive supplier, garnered a new lifetime order worth Rs 3602 crore during H1 FY24, while successfully onboarding three new EV customers in the second quarter of fiscal year 2024. 

This order win comes in addition to securing business from two customers for supplying components related to EV powertrains.

During an investor call, Varroc Engineering revealed that the new EV customers include a domestic startup that is yet to begin production, as well as a prominent export player. The company specified that orders for products such as motors, controllers, and connectivity devices were made in the EV segment. With these new orders, Varroc Engineering anticipates a significant increase in EV revenue within the next 12 months.

Varroc Engineering is a crucial supplier to major two-wheeler companies, including Bajaj Auto, Royal Enfield, KTM, Piaggio, Suzuki, Ducati, Harley Davidson, Kawasaki, Yamaha, Hero Moto, Honda, M&M, Skoda Auto VW, Renault, and Nissan, amongst others. The company's capacity utilisation currently stands at approximately 60–65%. Any recovery in the two-wheeler industry would not only improve utilisation but also provide additional benefits in terms of operating leverage, the company informed investors.

In terms of financial performance, Varroc Engineering reported a net profit of Rs 55.7 crore in the second quarter of fiscal year 2024, a significant improvement compared to the loss of Rs 19 crore registered during the same period last year. Revenues from operations also saw an increase, reaching Rs 1,886 crore in Q2 FY24, compared to Rs 1,834 crore in Q2 FY23.

Tarang Jain, CMD of Varroc Engineering, addressed the current global business environment, mentioning that the geopolitical situation in Europe and the Middle East has created uncertainty. He acknowledged the possibility of interest rates coming under pressure if there is a further increase in inflation due to rising oil prices. However, Jain expressed confidence in the Indian economy, stating that it has sustained its growth momentum in fiscal year 2024. He also mentioned that while urban demand has already shown positive signs, the company expects rural demand to pick up during the current festive season.