The share price of Varroc Engineering declined over 10 percent on Monday after the company reported weak earnings for the March quarter. The firm's consolidated loss widened to Rs 144 crore from Rs 137 crore reported last year during the same quarter.
Net sales, however, jumped 31.9 percent to Rs 3,619.26 crore in Q4 FY21 from Rs 2,744.75 crore in Q4FY20.
EBITDA margin contracted 70 bps to 3.5 percent from 4.2 percent in the year-ago quarter.
The stock fell as much as 10.5 percent to its day's low of Rs 387.30 per share on the BSE.
The Varroc Lighting Systems (VLS) margins were impacted due to semi-conductor shortages leading to key customer OEMs shutting plants/ reducing volumes.
The company launched Project RACE (Rapid Achievement of Competitive Edge) to bring VLS EBIT level in line with industry benchmarks with the support of a global consulting firm. The benefits of this project are expected to be visible over the next 12-18 months.
After the earnings, Tarang Jain, the managing director (MD) of Varroc Engineering, said, "We have seen a strong recovery in two-wheeler and passenger vehicle volumes across India in Q4 FY21. The global (ex-China) passenger vehicle volumes in Q4 FY21 declined mainly due to severe semi-conductor shortages. As the current demand for chips is continuing to outstrip supply, suppliers are adding capacities. This additional capacity is expected to help meet auto sector demand starting end of Q2 FY22."
Varroc Engineering is an automotive component maker. It designs, manufactures and supplies exterior lighting systems, plastic and polymer components, electricals-electronics components, and precision metallic components to passenger car, commercial vehicle, two-wheeler, three-wheeler and off-highway vehicle OEMs directly worldwide.