1. At a Glance
Shanthi Gears Ltd is basically the Murugappa Group’s quiet cash-spinning gearbox factory, but with a share price that’s been running hotter than a Formula 1 pit crew. The company designs, manufactures, and services gears and gearboxes — yes, the stuff that makes other expensive machines actually move. With ROCE at 34.9% and ROE at 25.6%, they’re putting many IT companies to shame without writing a single line of code. Debt-free, sitting on healthy dividends (47.9% payout ratio), but priced at a P/E of 43.8, Shanthi is the definition of “quality stock premium”. It’s owned 70.46% by Tube Investments of India Ltd — meaning it’s got the Murugappa muscle behind it, and Murugappa doesn’t play around with mediocrity.
2. Introduction
Imagine a company that doesn’t make flashy EVs, sell overpriced coffee, or pump out Bollywood-sized marketing campaigns… and yet manages to grow profits at 31% CAGR over 5 years.
Shanthi Gears is that overachieving kid in class who says “Oh, I didn’t study” and still gets 95%. It’s been quietly engineering its way into market dominance while keeping its balance sheet cleaner than a freshly polished lathe.
And here’s the kicker — in a world obsessed with “digital transformation” and “AI revolution”, Shanthi still makes real, heavy, metal-and-oil smelling products. And people are lining up to pay.
The company is almost debt-free, has maintained a healthy dividend habit, and thanks to the Murugappa Group’s deep pockets, it enjoys both stability and credibility. The only sore spot? The stock trades at 10.5x its book value — meaning investors have already priced in a few years of future glory.
3. Business Model (WTF Do They Even Do?)
Shanthi Gears designs, manufactures, supplies, and services gears and gearboxes — industrial products
that are mission-critical for sectors like steel, cement, sugar, power, mining, and even defense. Think of them as the “silent partners” of every machine that actually produces something useful.
Products range from worm gearboxes to planetary drives, from custom gears to high-precision marine applications. They don’t just make parts; they engineer bespoke solutions. And then there’s the after-sales service business — because when a gearbox breaks down in a steel plant, the last thing you want is a two-month wait for a replacement.
The beauty? This is a B2B, high-margin, low-competition niche. No teenage startup founder is going to wake up and say, “Let’s disrupt gears.”
4. Financials Overview
Let’s slice through the numbers like a precision-cut gear tooth:
- FY25 Sales: ₹605 Cr (Up from ₹446 Cr in FY23)
- FY25 EBITDA: ₹129 Cr (EBITDA margin ~21%)
- FY25 PAT: ₹96 Cr (PAT margin ~16%)
- 5-year Profit CAGR: 31%
- ROCE: 34.9%
- ROE: 25.6%
- EPS (TTM): ₹12.66
- Recalculated P/E: ₹554 ÷ ₹12.66 ≈ 43.75 (confirmed from quarterly EPS run rate)
- Debt: Practically zero
Colourful Commentary:
This company prints profits more smoothly than most printers print paper. No messy debt, margins over 20%, and still enough spare cash to hand
