Shaily Engineering Plastics Limited

Shaily Engineering Plastics reported a strong FY25, with consolidated revenue growing by 22% to INR786.8 crores, up from INR643.9 crores in FY24. This growth was accompanied by significant profitability improvements, as EBITDA increased by 45% to INR178.4 crores, leading to an EBITDA margin expansion of 350 basis points to 22.7%. PAT also saw a robust increase of 63% to INR93.1 crores, with PAT margin expanding by 290 basis points to 11.8%. The company achieved a ROCE of 24.4% and ROE of 18.5% as of March 31, 2025, demonstrating efficient capital utilization with a low debt-to-equity ratio of 0.4x.

The Healthcare segment emerged as a primary growth engine, with revenues soaring by 53% year-on-year to INR164.7 crores in FY25, now contributing 21% to the top line. Management anticipates this segment to grow to approximately 30% of total revenues in the next few years. The company signed two new customers for its IP-led pen platforms (Neo and Toby) and expects to commence commercial supplies of pens for the GLP-1 drug semaglutide in FY26. Shaily also secured 8 new contracts for pen injectors/auto injectors, primarily for GLP-1s, and is strategically focusing on innovator pharma and large players in regulated markets.

To support the growing demand, Shaily is undertaking a significant capacity expansion, planning to add 40-50 million pens per year over the next 18-24 months. This expansion is primarily aimed at servicing the GLP-1 market. The total capex for FY26 is projected to be around INR180-185 crores, with INR150 crores specifically allocated for Pharma capacity expansion. This investment is expected to increase the Pharma gross block to INR370-375 crores, with an anticipated asset turn of 1.5-2x. The total pen capacity after this expansion is expected to reach 80-90 million pens, with a projected 70-30 split between pens and auto-injectors.

Management addressed concerns regarding the impact of oral GLP-1s, asserting that while orals will play a role, their market share is likely to be limited to around 20%, with injectables retaining the majority due to superior efficacy and bioavailability (e.g., oral semaglutide has <2% bioavailability versus 80-85% for injectables). Shaily's new generation GLP-1 devices are designed to be non-priming, fixed-dose, and intuitive, targeting global large pharmaceutical companies. For FY26, the company targets selling 30-35 million pens, representing approximately 70% growth, with upwards of 70% being commercial batches.

The Consumer segment grew by 17% to INR560.8 crores in FY25, driven by new product additions and business from marquee FMCG customers and global retail chains. The Industrial segment also saw growth of 12% to INR61.4 crores in FY25, securing new business for automotive components and knobs for exports. Management expects steady growth across both these segments in the coming year, although specific numerical guidance was not provided. No inventory stocking was observed in the consumer segment due to tariff issues, with growth stemming from new orders and project shipments.

Shaily is actively pursuing new product development, including an emergency use auto-injector (clinical batches planned for Q4 FY26) and a soft mist inhaler (concept cleared for IP). The company's approach to new product development for originators involves extensive user studies, patient behavior analysis, and addressing existing device issues to create simple, accurate, and intuitive solutions. This strategy aims to leverage Shaily's agile development capabilities, which management believes provide a significant advantage, particularly for pen injectors, compared to larger competitors like Ypsomed and BD.

The company experienced an increase in working capital, with inventory days rising from 1 month to 4 months. This was attributed to strategic inventory build-up for pharma scale-up and securing material requirements during a principal supplier's plant maintenance shutdown. Other current liabilities also increased significantly, primarily due to customer advances. Despite this, the company maintains a healthy financial position with a debt-to-equity ratio of 0.4x and long-term debt-to-equity of 0.07x as of March 31, 2025, indicating disciplined capital use.