Gandhi Special Tubes Shares Plummet 12%; Announces Double Shareholder Return in FY26 With ₹78 Cr Buyback

Synopsis: Pairing a Rs. 15 per share dividend with a Rs. 78.13 crore buyback at up to Rs. 900 per share, Gandhi Special Tubes has announced a combined capital return package that outstrips its FY26 net profit of Rs. 68.36 crore made possible by a large investment corpus accumulated over years of debt-free cash generation, even as full-year revenue grew a measured 11 percent.

A BSE and NSE-listed seamless steel tubes manufacturer came into focus after its board approved a combined shareholder return package alongside audited results for the year ended March 31, 2026. At its meeting on May 25, the board recommended a Rs. 15 per share final dividend and a buyback of up to 8,68,100 equity shares at a maximum price of Rs. 900  placing total capital outflow on equity returns at approximately Rs. 96 crore in a year when the company earned Rs. 68.36 crore in net profit.

With a market capitalisation of Rs. 1,043.43 crore, the shares of Gandhi Special Tubes Limited were last recorded at Rs.  858.65 per share, down 10.67 percent from its previous close of Rs. 961.25.  It is trading at a P/E of 17.09.

Gandhi Special Tubes reported standalone revenue from operations of Rs. 191.77 crore for FY26, up 11.1 percent from Rs. 172.54 crore in FY25. Net profit grew ahead of revenue  rising 16.5 percent to Rs. 68.36 crore from Rs.  58.67 crore  reflecting ongoing operating margin expansion. EPS for the year stood at Rs. 56.26, up from Rs. 48.24 in the prior year.

Q4 FY26 revenue came in at Rs. 47.20 crore, 8.9 percent higher year-on-year, but Q4 net profit fell to Rs. 9.36 crore from Rs. 11.95 crore in the same quarter last year. The decline is not an operating deterioration. Other income turned sharply negative in Q4 at -Rs. 5.47 crore, driven by mark-to-market losses on the company’s mutual fund holdings as at March 31, 2026, compared to a positive Rs. 2.25 crore in Q4 FY25.

The underlying business generated operating cash flow of Rs. 55.20 crore for the full year, and the operating profit margin, per quarterly trend data, continued to improve through the second half. The exceptional item for the year, a net charge of Rs. 93.18 lakh related to incremental gratuity and leave liabilities under the New Labour Codes, was modest and fully absorbed.

Dividend and Buyback

The board recommended a final dividend of Rs. 15 per equity share, representing 300 percent on the face value of Rs. 5. Subject to shareholder approval at the AGM  scheduled for August 12, 2026, with payment on or before September 11.

On the same day, the board approved a buyback of up to 8,68,100 equity shares, representing 7.14 percent of total paid-up capital, at a maximum price of Rs. 900 per share for a total consideration not exceeding Rs. 78.13 crore. The buyback will proceed via the tender offer route on a proportionate basis, and is subject to special resolution approval at the AGM. The promoter group, holding 73.52 percent of the company, a position that has not moved in over three years, has communicated its intention to participate.

The combined return of approximately Rs. 18.23 crore in dividends and up to Rs. 78.13 crore via buyback totals roughly Rs. 96 crore, well above FY26 net profit. This is funded by the company’s investment corpus rather than any balance sheet strain: non-current investments stood at Rs. 202.43 crore as at March 31, 2026, up from Rs. 164.74 crore a year earlier, built up over a decade of positive free cash generation in a company that carries virtually no financial debt. On the EPS arithmetic: a 7.14 percent reduction in share count mechanically implies approximately 7.7 percent accretion to per-share earnings on the remaining base, all else equal.

At a maximum buyback price of Rs. 900 against the last recorded market price of Rs. 858.65, the implied premium is modest at around 5 percent. The effective clearing price under the tender offer will depend on shareholder participation, including the promoter group’s tender size.

Business Overview

Gandhi Special Tubes Limited, incorporated in 1959, manufactures seamless and welded steel tubes and coupling nuts, and generates wind power. The company traces its origins to a technical collaboration with German firm Benteler.

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