Shanthi Gears Q2 FY27: standalone PAT falls 27% YoY to ₹15.7 Cr on margin squeeze

Shanthi Gears' standalone PAT fell 26.96% YoY to ₹15.71 Cr (₹21.51 Cr in Q2 FY26) on revenue of ₹127.99 Cr, down 2.97% YoY from ₹131.91 Cr — the third consecutive YoY revenue decline. PBT dropped 29.5% YoY to ₹20.21 Cr and basic EPS fell to ₹2.05 from ₹2.80. Sequentially the print looks strong (revenue +10.8%, PAT +59.5% over a weak Q1 FY27 base), but per our standing rule the YoY read is primary: profit fell faster than revenue, so the QoQ jump reads as order-book execution catching up from a soft Q1 rather than a turnaround. There were no exceptional items in either the current or year-ago quarter, so the YoY decline is entirely underlying — no reported-vs-adjusted gap to reconcile.

Margins compressed on both measures: net margin (PAT/total income) fell to 11.98% from 15.60% YoY, and EBITDA margin to 17.74% from 20.10% YoY. The squeeze sits on two lines — depreciation jumped 45% YoY to ₹5.48 Cr (4.3% of revenue vs 2.9% a year ago) as new capacity came onto the books (gross PP&E up to ₹111.37 Cr from ₹97.99 Cr, with ₹15.44 Cr still in capital work-in-progress), and the raw-material cost ratio edged up to 48.1% of revenue from 46.6%, so the lower topline wasn't absorbed by a leaner cost base.

The stock went into the print at ₹475, down 29.1% over the past month of trading.

Leadership changes mid-quarter — new CFO & Head-HR appointed Sep 3; Head of Strategic Sourcing exited Sep 15; promoter Tube Investments added 2.69% stake Aug 21

We have no prior management guidance on record for this quarter, and the press release gives no forward numeric target — only its standing four-priority framework (Revenue, Profitability, ROIC, FCF). Management flagged ROIC of 25% and free cash flow of negative ₹1.3 Cr for the quarter, which it attributes to the capex cycle (₹17.42 Cr spent in H1) and a working-capital build (inventories up to ₹128.44 Cr from ₹112.84 Cr at FY26-end) rather than operating weakness. We found no analyst previews or consensus estimates specifically for this quarter, consistent with thin sell-side coverage of the stock, so the beat/miss call vs Street is unknown. On the quarter's other developments: the company's highest-ever order booking of ₹192 Cr (+37% YoY) and an unexecuted order book of ₹436 Cr are the clearest counter-signal to the weak P&L — they point to demand strength that hasn't yet flowed through to billed revenue. Parent Tube Investments raising its stake by 2.69% in late August, and a CFO/Head-HR change effective September 3 alongside a Head of Strategic Sourcing exit on September 15, are disclosed developments but neither was tied by the company to the quarter's financial performance.