Shanthi Gears (SHANTIGEAR)
CyclicalFairStock Score: 4/100 — RISKY
Score breakdown: P/E: 0/3 · ROCE: 2/2 · Growth: 0/2 · Dividend: 0/1
Key Financials
| Current Price | ₹397.45 |
| Market Cap | ₹3,050.04 Cr |
| P/E Ratio | 47.83 |
| ROCE | 34.87% |
| ROE | 21.98% |
| Dividend Yield | 1.01% |
| Profit Growth | -56.8% |
| Debt/Equity | — |
| Sales Growth | -14.4% |
| Promoter Holding | 70.47% |
| 52-Week Range | ₹384 — ₹741.8 |
| Sector | Industrial Manufacturing |
| Book Value | ₹57.36 |
Strengths
- ROCE of 34.87% and ROE of 21.98% show strong capital efficiency even during a downturn.
- Promoter holding of 70.47% aligns management interests with long-term shareholders.
- Latest quarter remains profitable with net profit of ₹16 crore despite weak demand.
- Company still pays a dividend, yielding 1.11%, offering modest cash return to shareholders.
Concerns
- Sales fell 25.83% and profit fell 34.02%, indicating sharp demand deterioration.
- P/E of 41.11 and P/B of 9.71 leave no margin of safety for a declining business.
- Piotroski F-Score of 3/9 and FairStock Score of 4/100 signal high financial and operational risk.
- Book value is only ₹49.16, so the price of ₹477.50 is almost entirely an expectation of future growth.
AI Analysis
At ₹477.50, Shanthi Gears is priced at 41.1 times earnings and 9.7 times book value. I have to ask: what is the business actually earning? Sales fell 25.83% and profits fell 34.02%. The latest quarter shows ₹117 crore of sales and ₹16 crore of net profit. If I annualise that quarter, I get roughly ₹64 crore of profit—so the market is paying more than 50 times current earnings power, not 41 times. That is not a Graham-style margin of safety. Yes, the company is not a bad business. ROE of 21.98% and ROCE of 34.87% are well above the industrial average, and promoter holding at 70.47% means the operators have real skin in the game. But gears are a cyclical industrial product; when the demand cycle turns down, today’s high returns can fade fast. The F-score of 3/9 and the FairStock score of 4/100 warn that this is not a financially strong situation. Also, book value is just ₹49.16; paying ₹477.50 means placing enormous faith in future growth, not in assets I can count. I prefer durable earnings and honest valuations. Here I see shrinking sales, shrinking profits, and a share price that has already fallen from ₹598.90 but still looks rich. A great industrial franchise must be bought at a price that protects me; this one does not. I would wait on the sidelines until the cycle turns or the price falls to a level where the downside is limited.
Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer