Shanthi Gears Shares Dip 4% Despite Record ₹178 Cr Quarterly Order Booking

Synopsis: Shanthi Gears Limited reported Q4FY26 revenue of Rs. 135.10 crore and net profit of Rs. 16.27 crore, reflecting a marginal growth of around 0.5% QoQ. However, on a year-on-year basis, revenue declined around 11.8% and profit fell approximately 28%, indicating continued pressure on margins despite stable quarterly performance.

Shanthi Gears Limited, a subsidiary of Tube Investments of India Limited, reported its audited financial results for the quarter and financial year ended March 31, 2026, following a board meeting held on May 5, 2026. The results reflected mixed performance, with the company showing resilience sequentially but facing pressure on a year-on-year basis due to a cyclical slowdown in the capital goods sector. 

For Q4FY26, revenue stood at Rs. 135.10 crore, improving from Rs. 116.82 crore in Q3FY26 but declining 11.8% compared to Rs. 153.21 crore in the same quarter last year. Net profit came in at Rs. 16.27 crore, slightly higher than Rs. 16.19 crore in the previous quarter but down 27.6% from Rs. 22.46 crore reported in Q4FY25. Profit before tax for the quarter stood at Rs. 21.81 crore, compared with Rs. 31.41 crore a year earlier, reflecting the combined impact of lower revenues and higher input costs.

For the full financial year FY26, the company reported total revenue of Rs. 518.72 crore, marking a 14% decline from the previous year. Annual profit before tax stood at Rs. 102.70 crore, representing a 21% year-on-year drop. Despite the pressure on top-line growth, the company maintained strong operational efficiency, delivering a Return on Invested Capital (ROIC) of 39% and generating Free Cash Flow of Rs. 29.83 crore during the year.

Operationally, the company highlighted encouraging signs of recovery driven by stronger order inflows in the final quarter. During Q4FY26, Shanthi Gears Limited achieved its highest-ever quarterly order booking of Rs. 178 crore, representing nearly 89% growth compared to the same period last year.

As of March 31, 2026, the company’s unexecuted order book stood at Rs. 349 crore, providing significantly improved revenue visibility for the upcoming financial year. Management attributed the weaker yearly performance mainly to lower order inflows during the first half of the year and schedule deferments by key customers. Notably, the company achieved its highest-ever quarterly order booking of Rs. 178 crore in Q4 FY26 alone.

To reward its shareholders, the Board of Directors has recommended a final dividend of Rs. 2 per equity share (200%) for the financial year 2025-26. This is in addition to the interim dividend of Rs. 3 per share already paid earlier in the year, bringing the total dividend payout to Rs. 5 per share (500%) on a face value of Rs. 1 each.

The market reacted negatively to the year-on-year decline in profitability. As of 3:03 PM IST on May 5, 2026, shares of Shanthi Gears Limited were trading at Rs. 463.50, down 4.26% (Rs. 20.60) from the previous close. 

The stock opened at Rs. 485.05 during the session and fell to an intraday low of Rs. 450.00 as investors responded to margin compression. Despite the near-term pressure, the stock continues to trade at a premium valuation with a price-to-earnings ratio of 44.83, reflecting investor confidence in the company’s long-term positioning as a high-quality industrial and precision gear manufacturing player.

Company Overview

Shanthi Gears Limited, based in Coimbatore, is a leading player in the design and manufacture of high-quality gears and gearboxes. Serving critical sectors like steel, cement, sugar, and defense, the company is known for its engineering excellence. As a part of the Murugappa Group, Shanthi Gears continues to focus on its four strategic priorities: Revenue, Profitability, Return on Invested Capital (ROIC), and Free Cash Flow (FCF).

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