Shanthi Gears Limited (NSE:SHANTIGEAR), a subsidiary of Tube Investments of India Limited, held a Board meeting on 29 July 2026 and approved the unaudited standalone financial results for the quarter ended 30 June 2026. The company reported revenue of Rs 115.49 Crores in Q1 FY27, down from Rs 134.89 Crores in the same period of the previous financial year. The Board also approved the resignation of Mr. Malliraj S, Head of Strategic Sourcing, effective 15 September 2026.
Key Highlights
- Shanthi Gears reported Q1 FY27 revenue of Rs 115.49 Crores, representing a year-on-year decline from Rs 134.89 Crores in Q1 FY26.
- Profit before tax declined to Rs 14.17 Crores in Q1 FY27 compared with Rs 30.62 Crores in Q1 FY26, reflecting the revenue contraction.
- Profit after tax stood at Rs 9.85 Crores in Q1 FY27 versus Rs 26.9 Crores in Q1 FY26.
- The company achieved a return on average invested capital of 17% in Q1 FY27 and generated free cash flow of Rs 16.2 Crores during the quarter.
- Basic earnings per share (EPS) for Q1 FY27 was Rs 1.28 per share against Rs 2.96 per share in Q1 FY26.
- Mr. Malliraj S, Head of Strategic Sourcing, resigned effective 15 September 2026 citing personal reasons; a disclosure under SEBI Listing Regulations has been filed.
- Financial results were reviewed by the Audit Committee and subjected to limited review by statutory auditors MSKA & Associates.
About the Company
Shanthi Gears Limited (NSE:SHANTIGEAR, BSE:522034) is a manufacturer of gearboxes and gear products. The company is a wholly-owned subsidiary of Tube Investments of India Limited, a diversified conglomerate with interests across segments including engineering products, bicycle and auto parts, and industrial equipment. Shanthi Gears is headquartered in Coimbatore, Tamil Nadu, with its registered office at 304-A, Trichy Road, Singanallur. The company's manufacturing focus remains on precision gearbox solutions and gear components serving automotive, industrial, and other engineering sectors. The company has a paid-up equity share capital of Rs 7.67 Crores divided into shares of face value of Rs 1 each.
Announcement in Detail
The Board of Directors of Shanthi Gears Limited met on 29 July 2026 and approved the unaudited standalone financial results for the quarter ended 30 June 2026, in compliance with Regulations 30 and 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The unaudited results were subjected to a limited review by the company's statutory auditors, MSKA & Associates LLP, Chartered Accountants. The financial statements have been prepared in accordance with Indian Accounting Standards 34 (Interim Financial Reporting) and relevant provisions of the Companies Act, 2013.
Revenue from operations for Q1 FY27 declined to Rs 115.9 Crores from Rs 134.39 Crores in Q1 FY26. Cost of materials consumed stood at Rs 70.87 Crores in Q1 FY27 against Rs 75.0 Crores in the prior year quarter. Employee benefits expense was Rs 19.78 Crores compared with Rs 19.35 Crores in Q1 FY26. The company recorded depreciation and amortisation expense of Rs 5.06 Crores and other expenses of Rs 20.64 Crores in the quarter. Notably, the company recorded an exceptional item of Rs 3.22 Crores related to the statutory impact of the new Labour Code, which came into effect on 21 November 2025. This labour code impact was recognised as an adjustment to the provision for defined benefit obligation arising from a change in wage definition.
Profit before tax and exceptional items for Q1 FY27 was Rs 14.17 Crores, down from Rs 30.62 Crores in Q1 FY26. After accounting for the labour code exceptional item and tax expense of Rs 4.32 Crores, profit after tax stood at Rs 9.85 Crores compared with Rs 26.9 Crores in Q1 FY26. Basic earnings per share declined to Rs 1.28 per share from Rs 2.96 per share, while diluted EPS stood at Rs 1.28 per share against Rs 2.96 per share in the prior year quarter. The company also approved the resignation of Mr. Malliraj S, Head of Strategic Sourcing, effective from the closing hours of 15 September 2026, due to personal reasons. A disclosure under SEBI Listing Regulations has been filed in connection with this senior management departure.
Impact on Investors
Investors will note that revenue declined by approximately 14% year-on-year to Rs 115.9 Crores in Q1 FY27, indicating a contraction in the company's topline. This revenue decline directly cascaded to profitability, with profit after tax falling by 63% to Rs 9.85 Crores from Rs 26.9 Crores in Q1 FY26. Basic earnings per share dropped to Rs 1.28 from Rs 2.96, representing a significant reduction in per-share earnings. The filing shows that the company faced headwinds in demand or order execution during the quarter, as evidenced by the material contraction in both revenue and operating profit before exceptional items.
The disclosure also reveals a one-time exceptional charge of Rs 3.22 Crores arising from the statutory impact of the new Labour Code effective from November 2025. This charge relates to an upward adjustment in the provision for defined benefit obligations due to a change in wage definition under the consolidated labour legislation. Investors should note that the company has indicated it will continue to monitor the finalisation of central and state rules and will provide further accounting effects as needed. The departure of Mr. Malliraj S, Head of Strategic Sourcing, represents a senior management change, though the company has disclosed this through formal regulatory channels. On the positive side, the company maintained a return on average invested capital of 17% and generated free cash flow of Rs 16.2 Crores during the quarter, indicating continued operational efficiency in cash generation despite the revenue decline.
Sector / Market Context
Shanthi Gears operates in the gearbox and gear products manufacturing segment, which serves automotive, industrial, and engineering sectors in India. The Indian automotive and industrial equipment sectors have faced cyclical demand pressures in recent quarters, with original equipment manufacturers (OEMs) managing supply chain normalisation and demand fluctuations post-pandemic. The introduction of consolidated labour codes in November 2025, consolidating 29 existing labour laws, has created a new regulatory environment affecting manufacturing sector profitability. The company's disclosure of a labour code exceptional charge of Rs 3.22 Crores reflects the sector-wide impact of this regulatory change on defined benefit obligations and wage structures. Within this backdrop, the company's focus on maintaining return on invested capital at 17% and generating positive free cash flow of Rs 16.2 Crores demonstrates the management's emphasis on capital efficiency and cash preservation during a period of demand headwinds.