Shanthi Gears hits brakes

Shares of Shanthi Gears slipped in today’s  session, falling over 2% to Rs.509.10 after the company reported a 16% year-on-year decline in Q2FY26 profit. The stock opened at Rs.525.00, compared to a previous close of Rs.521.20, and hit an intraday low of Rs.509.10 amid weak sentiment following the results.

For Q2FY26, Shanthi Gears reported a consolidated net profit of Rs.21.5 crore, down 16% YoY. Revenue from operations rose modestly by 3% to about Rs.145 crore, while EBITDA declined 9% to Rs.30 crore. Operating margins contracted to 20.7% versus 23.4%, due to higher input and energy costs. The company cited muted industrial demand and delayed order conversions in process and capital goods industries as key challenges.

The market has naturally reacted negatively as its near-term earnings visibility remains moderate but not exactly on a complete sell-out mode as the company has a  strong promoter backing under Tube Investments of India (Murugappa Group), its debt-free balance sheet, and prudent capital management continue to support long-term fundamentals. Focus areas remain on expanding into high-margin defence, railways, and renewable sectors, alongside automation-driven productivity gains.

All eyes in the coming months will be on order inflows from defence, railways, and renewables segments through H2FY26. What will also be keenly seen is the improvement in margins from easing raw material prices and premium product mix. Other triggers could be sustained aftermarket demand from gear replacements and spares (35% of revenue) and potential capex announcements for capacity expansion or technology upgrades.