Shaily Engineering Plastics Limited

Shaily Engineering Plastics reported robust Q2 FY26 results, with consolidated revenue growing 34% year-on-year to INR 257 crores. EBITDA doubled to INR 82 crores, leading to a significant EBITDA margin expansion of 1030 basis points, reaching 31.8%. Net Profit (PAT) also saw substantial growth, increasing by 134% year-on-year to INR 51 crores, with PAT margin at 20%. For H1 FY26, revenue stood at INR 503 crores, up 36% YoY, with EBITDA at INR 152 crores (96% growth) and PAT at INR 92 crores (135% growth).

The Healthcare segment was the primary growth driver, with revenue surging 163% year-on-year to INR 98.6 crores in Q2 FY26, now contributing 38% to the overall revenue mix. The company launched its next-generation GLP-1 device, Shaily Axiom Max, a fixed-dose pen with no priming required and a dose counter. Four new projects were signed across GLP-1 and other therapies, and management expects the Healthcare segment to grow 30-40% annually for the next few years.

Beyond Healthcare, Shaily secured new business across other segments. The Consumer segment was awarded five new projects from three marquee home furnishings customers. In the Industrial segment, one new project was secured from an automotive major. These wins reinforce the company's presence and long-standing customer relationships in diverse markets.

To meet increasing demand, Shaily is significantly expanding its manufacturing capacity. The company installed 19 new machines in Q2 FY26 and is in the process of doubling its pen manufacturing capacity from 40 million to 80 million units by the end of FY26, with an investment of approximately INR 125 crores. A new manufacturing line is expected to be operational by the end of Q3 FY26, and an additional 10 million Toby capacity is also being added.

The improvement in gross margins is attributed to the increasing revenue contribution from the company's own IP-led pen platforms, which offer better margins. Additionally, new products with higher gross margins have been added across other business areas. Management believes this gross margin improvement is sustainable and will continue, although it will be influenced by the product mix in any given quarter.

The Consumer Electronics segment is expected to begin generating revenues in H2 FY26, following ongoing development work. While not anticipated to be a material contributor to revenue next year, management sees substantial long-term potential, estimating it could become a $20 million to $100 million business. Sizable revenue from this segment is projected to start especially in 2028, with supplies beginning in 2027.

Management addressed concerns regarding potential regulatory delays for GLP-1 launches in Canada, stating that a diversified customer base (23-24 partners) mitigates risk. They also acknowledged Chinese competition with five knockoffs of popular pen designs but emphasized their strategy to scale up and become large enough to withstand such threats. The threat from oral GLP-1 medicines was downplayed due to high API requirements and low bioavailability compared to injectables.