Transcript

VARROC/SE/INT/2026-27/95 November 7, 2026 The Manager- Listing The Manager – Listing The Listing Department, The Corporate Relation Department, National Stock Exchange of India BSE Limited Limited Phiroze Jeejeebhoy Towers, Exchange Plaza, Plot No. C/1, G Dalal Street, Fort, Block, Bandra-Kurla Complex, Mumbai-400 001. Bandra (East), Mumbai-400051. BSE Security Code: 541578 NSE Symbol: VARROC Sub: Transcript of Investor / Conference Call pertaining to Unaudited Financial Results for the quarter and half year ended on September 30, 2026 Dear Sir/Madam, Please find Transcript of Investors / Conference Call held on Wednesday, November 4, 2026, in respect of the Un-audited Financial Results for the quarter and half year ended on September 30, 2026. This is for your information and records. For Varroc Engineering Limited Anil Ghatiya Company Secretary & Compliance Officer Encl: A/a “Varroc Engineering Limited Q2 FY ‘27 Results Earnings Conference Call” November 04, 2026 MANAGEMENT: MR. TARANG JAIN – CHAIRMAN AND MANAGING DIRECTOR – VARROC ENGINEERING LIMITED MR. ARJUN JAIN – WHOLE-TIME DIRECTOR AND CHIEF EXECUTIVE OFFICER, BUSINESS UNIT I – VARROC ENGINEERING LIMITED MR. DHRUV JAIN – WHOLE-TIME DIRECTOR AND CHIEF EXECUTIVE OFFICER, BUSINESS UNIT II – VARROC ENGINEERING LIMITED MR. MAHENDRA KUMAR – GROUP CHIEF FINANCIAL OFFICER – VARROC ENGINEERING LIMITED MR. BIKASH DUGAR – HEAD, INVESTOR RELATIONS AND FINANCE CONTROLLER OF BUSINESS UNIT II – VARROC ENGINEERING LIMITED MR. VISHAL RAVAL – GROUP FINANCE CONTROLLER, BUSINESS UNIT I – VARROC ENGINEERING LIMITED MODERATOR: MS. RONAK MEHTA – ICICI SECURITIES Page 1 of 19 Varroc Engineering Limited November 04, 2026 Moderator: Ladies and gentlemen, good day, and welcome to the Varroc Engineering Q2 FY '27 Results Earnings Conference Call hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ronak Mehta from ICICI Securities. Thank you, and over to you, Mr. Mehta. Ronak Mehta: Thank you. Good evening, everyone. On behalf of ICICI Securities, we would like to welcome you all to Varroc Engineering's Q2 FY 2027 earnings conference call. Today, we have with us from the management team, Mr. Tarang Jain, Chairman and Managing Director, Mr. Arjun Jain, Whole-Time Director and CEO, Business Unit I, Mr. Dhruv Jain, Whole-Time Director and CEO, Business Unit II, Mr. Mahendra Kumar, Group Chief Financial Officer, Mr. Bikash Dugar, Head IR and Finance Controller, Business Unit II, and Mr. Vishal Raval, Group Finance Controller, Business Unit I. We will start the call with a brief opening remarks from the management team about the quarter gone by, and then we will proceed to the Q&A session. Thank you and over to you, sir. Tarang Jain: Thank you, Ronak. Good evening to everyone. I am Tarang Jain here. Thank you, team ICICI Securities, for hosting the call. To start with, soon to give you the highlights of Q2 FY 2027. In Q2 FY 2027 and the half one financial year 2027, the Indian economy remained relatively resilient despite elevated crude prices and supply chain concerns arising from the war. Automotive demand continued to maintain a strong momentum with EV adoption gaining further traction. From the start of this financial year, geopolitical uncertainties have led to renewed commodity inflation, creating near-term pressure on margins. While customer recovery mechanisms are in place, there is an inherent time lag between the increase in input costs and their recovery. We are actively mitigating this impact through customer engagements, value engineering, localization, and cost productivity measures, and expect the pressure to moderate as recoveries progressively flow through. During quarter two FY 2027, we witnessed strong year-on-year growth across all major automotive segments. Two-wheelers grew by 16.3%, three-wheelers grew by 23.7%, passenger vehicles by 24.9%, and commercial vehicles by 33.9%. The electric two-wheeler volumes grew by a strong 115% year-on-year. On a sequential basis, the festive season supported growth across all segments. Two-wheelers grew by 11.7%, three-wheelers by 25.1%, passenger vehicles by 14.2%, and commercial vehicles by 19% compared with quarter one of financial year 2027. For half year financial year 2027, industry volumes also remained strong with two-wheelers growing by 19.5%, three-wheelers by 30.5%, and passenger vehicles by 21%, and commercial vehicles by 24.7% year-on-year. I am pleased to share that in quarter two financial year 2027, the company registered another quarter of strong growth with revenue reaching INR29,479 million, representing a growth of 33.6% year-on-year and 11.9% sequentially. Page 2 of 19 Varroc Engineering Limited November 04, 2026 This growth was broad-based. Our India operations grew by 29.5% year-on-year, whilst our overseas operations grew by 104.1%, demonstrating encouraging traction in our international businesses. For half year FY 2027, our consolidated revenues stood at INR55,822 million, representing a growth of 31.8% year-on-year. This was supported by a 29.1% growth in our India business and a 70.7% growth in the overseas business. Our EBITDA for quarter two of FY 2027 was INR2,611 million, representing an EBITDA margin of 8.9% compared with 8.5% in quarter one of FY 2027 and 9.1% in quarter two of FY 2026. Our profit before tax before JV profits and exceptional items increased to INR1,401 million, representing 4.7% of revenue compared with 4.3% in quarter one of FY 2027 and 4.1% in quarter two of FY 2026. The sequential improvement in profitability is encouraging, particularly considering that our margins continue to be impacted by war-related inflation and under- recovery from customers. For half one of FY 2027, our company reported an EBITDA of INR4,838 million, translating into an EBITDA margin of 8.7%. Profit before tax before JV and exceptional items was INR2,532 million or 4.5% of revenue, an improvement of 40 basis points year-on-year. In half one of FY 2027, the under-recovery from the customer has impacted the EBITDA by 0.4% And recovery agreed with the customer has not been fully realized in cash in half year of FY 2027 is over INR1,140 million, which has adversely impacted our cash flow generation and increased our net debt slightly by INR599 million. We will continue to focus on recovering commodity inflation, improving contribution margins, increasing productivity, and maintaining a discipline on fixed costs. One of the particularly encouraging aspects of our performance is the increasing participation in electric mobility. Revenue from products supplied to EV models reached approximately 19% of our quarter two FY 2027 consolidated revenue, compared with approximately 16% in quarter one of FY 2027, and EV-related revenue grew by a significant 130% year-on-year. Our e- mobility solutions business itself recorded revenue of approximately INR2,773 million in quarter two of FY 2027, compared with INR1,941 million in quarter one of FY 2027. This reinforces our confidence in the investments and capabilities we have been building in electric mobility and advanced electronics. Our overseas operations recorded a revenue growth of approximately 138% year-on-year during the quarter. Advanced electronics is benefiting as new business wins progressively convert into revenue. The overseas business also benefited from an engineering income and lower R&D losses due to a little higher capitalization. We remain focused on improving the performance of our overseas businesses through higher capacity utilization, disciplined cost management, and conversion of the recently secured programs into [Showing first 8,000 characters — download PDF for full document]