Broker’s Call: Shaily Engineering Plastics (Accumulate)

Target: ₹1,600

CMP: ₹1,445.15

We initiate coverage on Shaily Engineering (Shaily), as we believe the company will benefit not only from its longstanding relationship with its existing customers but its ongoing emphasis on growing its healthcare and other segments would also catapult its operational performance into a consistent and strong growth trajectory.

Shaily has strong R&D capabilities and expertise in precision manufacturing, enabling it to get orders for newer products, like carbon steel furniture, from existing and new clients. The company has a dedicated R&D centre in the UK catering to projects from pharma companies and has been a significant contributor to Shaily’s bottom line over the last two years.

Shaily is among the few manufacturers of insulin pens globally and has developed its own IP devices. This is a high-entry barrier segment with low competitive intensity due to complex regulatory approval requirements. We believe injection pens for drug delivery should see strong growth as demand for GLP-1 (Glucagon-Like Peptide) drugs for diabetes and obesity treatment gains momentum. Shaily has been strategically increasing its capacity and aims to increase its healthcare segment revenue contribution to 25 per cent by FY27e vs. 18.6 per cent currently.

While the consumer segment is matured and can be expected to grow at high single-digits on average, its industrial and healthcare segment may continue to exhibit 20 per cent+ growth in the near term.