1. At a Glance – Blink and You’ll Miss the Irony
Shanthi Gears Ltd is that classic Indian industrial stock which does everything right on paper and still gets punished like it forgot to wish the market good morning. Current market cap stands at ₹3,605 Cr, with the stock trading around ₹474, down ~9.4% over the last 3 months and ~18% over 6 months. Meanwhile, return ratios are flexing hard: ROCE at 34.9%, ROE at 25.6%, zero debt, and a dividend yield of ~1.05%.
Q3 FY26 numbers? Revenue came in at ₹116.82 Cr, PAT at ₹16–17 Cr, both down YoY and QoQ. Cue panic? Maybe. But zoom out and you see a company that grew revenues ~59% between FY22–FY24, runs on Murugappa DNA, and prints cash like an old-school CNC machine that refuses to die.
The irony: this is a boring, profitable, capital-efficient business… trading at ~43x trailing P/E, higher than the industry median (~29.8x). Is the market overpaying for “quality”, or is Shanthi Gears just having a temporary industrial hangover? Let’s open the gearbox and see what’s grinding.
2. Introduction – A Gear Company That Spins Investors Too
Shanthi Gears is not a startup. It’s not flashy. It doesn’t talk about AI, EV disruption, or GenAI copilots. It manufactures gears. Heavy, oily, industrial gears. And yet, for years, the market has treated it like a premium consumer brand — because consistency, governance, and capital efficiency have been immaculate.
The company sits comfortably under the umbrella of Tube Investments of India Ltd, part of the legendary Murugappa Group — a 124-year-old business house with FY25 turnover of ₹77,881 Cr. Translation: promoters who don’t wake up one morning and decide to pivot into crypto mining.
But here’s where things get spicy. After multiple years of 30%+ profit CAGR, Q3 FY26 shows revenue down 25.8% YoY and profit down ~34% YoY. The stock reacts like a drama queen, despite an order book of ₹340+ Cr (as of Q1 FY25), zero debt, and expanding manufacturing capacity.
So the big question:
Is this a cyclical pause… or has the gearbox finally started slipping?
3. Business Model – WTF
Do They Even Do?
Imagine explaining Shanthi Gears to a lazy but intelligent investor at 2 a.m.
They make gears. Custom gears. Heavy-duty gears. Precision gearboxes.
And no, not the ₹500 bicycle kind.
Shanthi Gears designs, manufactures, supplies, and services gearboxes, worm gears, helical gears, and loose gears used across industries like mining, cement, wind energy, power generation, steel, railways, textiles, rubber & plastics, extruders, and general engineering.
This is a high-mix, low-volume, customization-heavy business. That’s important. Because customization =
- Better pricing power
- Stickier clients
- Lower import substitution risk
Their clients are OEMs and industrial operators who don’t switch vendors like they switch toothpaste. Once a gearbox design is approved and installed, after-sales and replacement cycles quietly generate annuity-like revenues.
Geographically, 92% of revenue is domestic, exports just ~8%. This is not an export story — it’s a domestic industrial capex + replacement cycle play.
They operate 3 manufacturing facilities and a foundry in and around Coimbatore, and recently acquired land at Sanand, Gujarat, to expand servicing and manufacturing. Slow, boring, sensible expansion — exactly how Murugappa companies behave.
Question for you:
Would you rather own a “visionary” company burning cash… or a gear-maker quietly compounding?
4. Financials Overview – Numbers Don’t Lie, But They Do Tease
Result Type Detected:
The latest announcement clearly states Quarterly Results (Q3 FY26).
➡️ Result type locked: QUARTERLY RESULTS
EPS Annualisation (Strict Rule Applied)
Q3 FY26 EPS = ₹2.11
Q1 FY26 EPS = ₹2.96
Q2 FY26 EPS
