Citigroup Global maintains buy on Varroc Engineering, lowers target price to Rs 630

Citigroup Global Markets has maintained buy rating on Varroc Engineering in the long term and revised target price to Rs 630 from Rs 750. Shares of Varroc Engineering ended down 0.25% at Rs 447 on Friday while BSE Sensex closed 70.21 points up at 40,356.69.

Company Financials

For the quarter ended 30-09-2019, the company has reported consolidated sales of Rs 2703.23 crore, down -5.81% from last quarter sales of Rs 2870.08 crore and down -9.92% from last year same quarter sales of Rs 3001.05 crore. The company has reported net profit after tax of Rs 29.52 Crore in latest quarter.


Investment Rationale

The company reported a much weaker VLS eprformance than expected, said Citi. Ramp up in the new plants (a little prolonged than earlier expected) should aid revenue growth, said Citi. As dependence on Tesla comes down (as % of total VLS business), the company would likely see a steadier revenue and margin trajectory, the brokerage said.