Varroc Engineering IPO

Business description – Varroc Engineering is a tier-1 automotive component group. 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. It is the second largest Indian auto component group (by consolidated revenue for FY2017) and a leading tier-1 manufacturer and supplier to Indian two-wheeler and three-wheeler OEMs.

The company initially grew organically in India by adding new business lines such as electrical division and metallic division. In 2012, it acquired Visteon’s global lighting business, now known as Varroc Lighting Systems. Prior to the acquisition of Visteon’s global lighting business, in 2007 Varroc acquired I.M.E.S (a manufacturer of hot steel forged parts for the construction and oil and gas industries) in Italy and in 2011, it acquired Triom (a manufacturer of high end lighting systems for global motorcycle OEMs) with operations in Italy, Romania and Vietnam.

Varroc has a global footprint of 36 manufacturing facilities spread across seven countries, with six facilities for its Global Lighting Business, 25 for India Business and five for Other Businesses.

Promoters of Varroc Engineering – Tarang Jain

Varroc Engineering IPO details
Subscription Dates	26 – 28 June 2018
Price Band	INR965 – 967 per share
Fresh issue	Nil
Offer For Sale	20,221,730 shares (INR1,951.4 – 1,955.4 crore)
Total IPO size	20,221,730 shares (INR1,951.4 – 1,955.4 crore)
Minimum bid (lot size)	15 shares
Face Value	INR1 per share
Retail Allocation	35%
Listing On	NSE, BSE

Varroc Engineering’s financial performance (in INR crore)
	FY2013*	FY2014*	FY2015	FY2016	FY2017	FY2018
Total revenues	4,225.3	6,139.4	7,038.5	8,239.5	9,702.3	10,417.1
Total expenses	4,220.9	6,055.2	7,063.3	7,897.5	9,454.3	9,973.5
Profit after tax	-25.4	42.0	13.0	369.0	303.0	450.3
Net margin (%)	-0.6	0.7	0.2	4.5	3.1	4.3

* Figures for FY2013 and FY2014 are based on IGAAP and subsequent years are based on IND AS

Varroc Engineering Contact Details

Varroc Engineering Limited
L-4, MIDC Area
Waluj
Aurangabad– 431136

Phone: +91 240 6653 700
Fax: +91 240 2564 540
Email: [email protected]
Website: www.varrocgroup.com

Registrar of Varroc Engineering IPO

Link Intime India Private Limited
C-101, 1st Floor, 247 Park
Lal Bahadur Shastri Marg, Vikhroli (West)
Mumbai – 400 083

Phone: +91 22 4918 6200
Fax: +91 22 4918 6195
Email: [email protected]
Website: http://www.linkintime.co.in

Valuation of Varroc Engineering (Based on latest FY)

Earnings Per Share (EPS): INR33.4

Price/Earnings (P/E) ratio: 28.89 – 28.95

Return on Net Worth (RONW): 15.93%

Net Asset Value (NAV): INR209.69 per share