Shivam Autotech Ltd Q2 FY26 – Hero’s Favourite Gear-Maker Stuck in Reverse, Cranking Up ₹105 Cr NCDs at 15% IRR!

1. At a Glance

If you’ve ever ridden a Hero MotoCorp bike, chances are the gears that move it were born inside the sweat-soaked factories of Shivam Autotech Ltd (SAL) — a once-shiny auto component maker now knee-deep in debt and nostalgia. The company, priced at just ₹27.7 per share with a market cap of ₹363 crore, is trading at a whopping 207x its book value — a PE ratio so meaningless it could be used in an art exhibit titled “Abstract Finance”.

With sales of ₹113 crore in Q2 FY26 and a net loss of ₹12.4 crore, Shivam’s quarterly performance is less “vroom” and more “thud.” Year-on-year, sales dropped 5.98%, and losses continue to rev like a noisy scooter uphill. The company’s debt of ₹338 crore dwarfs its net worth, which has now turned negative ₹25 crore.

Still, promoters hold a commanding 69.5% stake, clinging to hope like a biker clutching the brake lever in Delhi traffic. Shivam’s relationship with Hero MotoCorp — its largest client contributing 40% of revenue — remains both its lifeline and its Achilles’ heel. The company has raised ₹105 crore via NCDs and OCDs at a 15% internal rate of return, which sounds less like financing and more like an expensive short-term loan from the mafia.

2. Introduction

There are comeback stories, and then there’s Shivam Autotech — trying to make one since 2014. Founded in 1999 and spun out of the Hero Group ecosystem, SAL started as a precision component manufacturer specializing in near-net-shaped forgings. That’s corporate jargon for “we make small metal things that actually matter.”

Once touted as a future star in the Indian auto components universe, the company has since hit every pothole possible — from rising debt, thin margins, and shrinking equity, to tax show-cause notices and credit downgrades. The latest CARE rating stands at BB- (Negative) — one notch above “please call your banker.”

Yet, Shivam soldiers on. The company’s Q2 FY26 results reflect its persistent struggle: Revenue at ₹113 crore, down from ₹120 crore last year, and losses of ₹12.4 crore, which have become a tradition. Interest expenses alone clock in at ₹13 crore per quarter, enough to fund a mid-size electric vehicle startup every three months.

So, is there light at the end of this gearbox tunnel, or just another oncoming truck? Let’s open the hood.

3. Business Model – WTF Do They Even Do?

Shivam Autotech is an auto transmission component manufacturer. In simpler terms, they make the guts of your vehicle’s gearbox — the unsung metallic heroes responsible for smooth shifting. Their products include transmission gears and shafts, alternator and starter motor components, EPS parts, precision-engineered forgings, and aluminum forged pieces.

The company uses cold, warm, and hot forging technologies to shape metal with surgical precision. It’s like a blacksmith shop with ISO certifications — IATF 16949:2016, ISO 14001:2015, and ISO 45001:2018 — operating across Gurgaon, Haridwar, Bengaluru, and Rohtak.

The major problem? Customer concentration risk. Around 40% of revenues come from Hero MotoCorp, and nearly 70% of Hero’s gear requirements come from Shivam. It’s a dependency that’s less “strategic alliance” and more “codependent relationship.” When Hero slows down, Shivam feels it first.

They’ve tried diversifying with clients like Bosch, Mando, Robert Bosch Steering, Mitsuba Sical, and Hilti, but the real money still lies in the two-wheeler segment. Unfortunately, two-wheeler demand has been wobbling like a scooter on a speed breaker.

4. Financials Overview

Quarterly Comparison (Figures in ₹ Crore)

Commentary:
Imagine running hard only to stay in the same place — that’s Shivam’s financial treadmill. Revenues have slipped year-on-year, EBITDA has halved since its pre-pandemic highs, and profits remain allergic to the color black. The company’s interest coverage ratio is just 0.07, meaning for every ₹1 earned before interest, ₹14 goes into paying interest — a true masterclass in negative leverage.

Annualized EPS stands at -₹3.76, implying a negative P/E, or in desi terms: “yeh valuation kuch samajh nahi aata.”

5. Valuation Discussion – Fair Value Range Only

Let’s decode this without emotional trauma.

• Annualized EPS (FY26e) = -₹3.76 (negative)
• So, P/E is not applicable. Let’s look at EV/EBITDA instead.