Varroc Engineering Q3 Review - Near Term Pain, Long Term Thesis Intact: Dolat Capital 

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Dolat Capital Report

Varroc Engineering Ltd. displayed a weak margin performance in Q3 FY21 dragged by contraction in margin of Varroc Lighting Systems (VLS).

Consolidated Ebitda de-grew by 13 % YoY at Rs 2.26 billion with margin of 6.5% (down 285 basis points YoY) on account of premium freight and overtime in Czech plants (due to labour shortage) and slower ramp-up in production of Poland and Morocco facilities.

The management expects VLS margin to normalize in Q4, however shortage of semiconductor may suppress the top line growth for VLS.

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