VARROC ENGINEERING - TREND IS CHANGING
FUNDAMENTALS
Varroc belongs to auto ancilliary sector.
One of the strongest OEM player to ride this bull run on auto sectors.
Ready for EV and had rolled out a lot of stuff for 2 wheelers already. Engine Valves, Lighting, Forging, ADAS ; you just name it and they make that.
The company is not only catering to Indian markets but have manufacturing setup outside india as well for global business..
One of the key points to note is that Varroc has very low public float around 8%.
75% with promoters, 5% with FIIs, and 12% with DIIs (MFs mainly)
While things went bit haywire post 2019 and company's growth went sideways to negative, it looks like they are back on track.
The current market cap is just under 8500 Crores (At cmp 555) while the Enterprise Value is value is already above 9600 Crores.
PE ratio is on a higher side amongst the peers but that would get adjusted with the expected rise in sales and underlying profits.
Cash flows of the company has also significantly improved.
Company has been taking initiative to lower down it's debt and its net debt to EBITDA had improved significantly (WALK the TALK).
While some business has seen some dip in European markets, the overall order book is very healthy and the results of all the initiatives shall reflect in the financials in next couple of years.
TECHNICAL
On technical charts it has broken out of 2019-2020 levels which it attempted to touch base in 2022 and recently in Sep/Oct 2023 as well. This attempt on 17 Nov 2023 has successfully cleared the resistance on weekly charts with rising volumes. Another interesting thing is that there was high volume rejection in May 2022 when it peaked around 493 in the month of April 2022; the current price and volume trend has even taken off those rejection levels with ease.
740 is a very very initial trading target (weak below 430) while I look this scrip as a portfolio buy for minimum 2-3 years time frame with targets of 1100 ++ (Weak below 400)
PS: From cmp of 555 this could be a doubler or multibagger in making. CLose watch on QoQ performance for next 6 quarters shall reveal a lot about the company.
Varroc belongs to auto ancilliary sector.
One of the strongest OEM player to ride this bull run on auto sectors.
Ready for EV and had rolled out a lot of stuff for 2 wheelers already. Engine Valves, Lighting, Forging, ADAS ; you just name it and they make that.
The company is not only catering to Indian markets but have manufacturing setup outside india as well for global business..
One of the key points to note is that Varroc has very low public float around 8%.
75% with promoters, 5% with FIIs, and 12% with DIIs (MFs mainly)
While things went bit haywire post 2019 and company's growth went sideways to negative, it looks like they are back on track.
The current market cap is just under 8500 Crores (At cmp 555) while the Enterprise Value is value is already above 9600 Crores.
PE ratio is on a higher side amongst the peers but that would get adjusted with the expected rise in sales and underlying profits.
Cash flows of the company has also significantly improved.
Company has been taking initiative to lower down it's debt and its net debt to EBITDA had improved significantly (WALK the TALK).
While some business has seen some dip in European markets, the overall order book is very healthy and the results of all the initiatives shall reflect in the financials in next couple of years.
TECHNICAL
On technical charts it has broken out of 2019-2020 levels which it attempted to touch base in 2022 and recently in Sep/Oct 2023 as well. This attempt on 17 Nov 2023 has successfully cleared the resistance on weekly charts with rising volumes. Another interesting thing is that there was high volume rejection in May 2022 when it peaked around 493 in the month of April 2022; the current price and volume trend has even taken off those rejection levels with ease.
740 is a very very initial trading target (weak below 430) while I look this scrip as a portfolio buy for minimum 2-3 years time frame with targets of 1100 ++ (Weak below 400)
PS: From cmp of 555 this could be a doubler or multibagger in making. CLose watch on QoQ performance for next 6 quarters shall reveal a lot about the company.
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