Archive · 13 Nov 2025
Two 'Quiet' Indian Manufacturing Stocks Show Strong Growth and Efficiency
Imagine you have two toy companies.
Both companies are really good at making money from the money they put into the business, meaning they don't have much debt and they make a lot of profit on their investments.
One company, Shanthi Gears, makes parts for big machines and has been around for a long time.
The other, Swaraj Engines, makes engines for tractors.
Both have grown a lot in the last five years, and their owners have made a good return on their investment.
Even though they are not as famous as other companies, they are doing very well financially.
Investors are watching them to see if they can keep this great performance going.
They are considered 'quiet' because they are not as talked about, but their financial numbers are impressive.
Shanthi Gears and Swaraj Engines are highlighted as 'quiet' stocks with strong financial metrics, including near-zero debt and high Return on Capital Employed (ROCE).
Shanthi Gears, established in 1972, specializes in industrial gearboxes and has seen sales grow by 20% CAGR and net profits by 31% CAGR over the last five years.
Swaraj Engines, incorporated in 1985, manufactures diesel engines for tractors and has experienced a 17% CAGR sales growth and 19% CAGR net profit growth in the past five years.
Both companies maintain debt-free status, with Shanthi Gears boasting a 35% ROCE and Swaraj Engines an impressive 56% ROCE, significantly outperforming industry medians.
Despite strong performance, the article questions whether these companies can sustain their growth trajectory, suggesting investors add them to their watchlist for close monitoring.
- Who
- Shanthi Gears Ltd. and Swaraj Engines Ltd., two Indian manufacturing companies
- What
- Companies exhibiting strong capital efficiency (high Return on Capital Employed) and zero debt, showing significant sales, EBITDA, and net profit growth over the past five years.
- When
- Financial data and stock performance are presented for the period up to November 11, 2025, with historical data from FY20 to FY25.
- Where
- India
- Why
- These companies are highlighted as potential smart buys due to their financial health (zero debt) and profitability (high ROCE), making them attractive to investors looking for efficient businesses.
Optimistic View
Cautious View
Future Growth Potential
Optimistic View
Shanthi Gears and Swaraj Engines demonstrate strong capital efficiency (high ROCE) and debt-free status, indicating significant potential for future growth and smart investment.
Cautious View
The article poses a question about whether these two less-known stocks can sustain their impressive numbers in the future, hinting at uncertainty regarding continued performance.
Current Valuation
Optimistic View
Shanthi Gears' current PE is 40x (vs. industry median 35x) and 10-year median PE is 45x (vs. industry median 29x), suggesting buyers are willing to pay a premium for its quality. Swaraj Engines' PE is 27x (vs. industry median 40x) and 10-year median PE is 22x (vs. industry median 30x), indicating it trades at a discount relative to its industry.
Cautious View
While Shanthi Gears commands a premium, its current PE is higher than the industry median, which could be a point of consideration for some investors.
- Shanthi Gears Ltd. Established
- 1972
- Shanthi Gears Ltd. Market Cap
- Rs 3,684 cr
- Shanthi Gears Ltd. ROCE
- 35%
- Shanthi Gears Ltd. Debt
- Zero Debt
- Swaraj Engines Ltd. Incorporated
- 1985
- Swaraj Engines Ltd. Market Cap
- Rs 4,767 cr
- Swaraj Engines Ltd. ROCE
- 56%
- Swaraj Engines Ltd. Debt
- Debt Free