Release Date: July 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Shaily Engineering Plastics Ltd (BOM:501423, Financial) reported a robust top line growth of 14% to INR 179 crores in Q1 FY '25.
- Gross margins and EBITDA margins improved to 42.1% and 20.1%, respectively.
- The company received purchase orders for one of its pen injectors amounting to 10 million units per year.
- Shaily U.K. has shown significant growth and is building capabilities to cater to big pharma.
- The company has entered into new contracts to develop two new pen injectors in the Healthcare segment.
Negative Points
- Machine utilization rate was around 39% in Q1 FY '25, indicating underutilization of capacity.
- Domestic revenue showed a bit of degrowth, with quarterly figures not meeting expectations.
- The company faces challenges in the European market, with no significant demand recovery observed.
- There were technical engineering challenges in Q1 that affected supply timelines.
- The insulin business, although stable, is price-sensitive and significantly commoditized, impacting margins.
Q & A Highlights
Q: Congratulations on the purchase order for 10 million tons. Would it be possible for you to provide some more specifics over here?
A: The 10 million tons purchase orders was supply for the insulin market. (Amit Sanghvi, Managing Director)
Q: And what's the duration for this? Like is it over a year?
A: It's over a year, so it will span -- it will get supplied over a period of this year and also spill over into the next. (Amit Sanghvi, Managing Director)
Q: Are we looking at, say, 11 million, 12 million plus, say, around 6 million, 7 million. So looking at around 17 million, 18 million tons this year? Or could it be substantially higher than this?
A: No, no, 17 million, 18 million is -- 17 million is correct. So that's also what we said during the last earnings call. (Amit Sanghvi, Managing Director)
Q: Is there any specific update on Semaglutide? By when do we plan to start supplies?
A: We plan to start supplies end of this year, so either December or January following year. We've just completed our multi-cavity tooling program and the assembly assets. So assembly assets and the new tools will all be qualified to start production in September '24, which will then go through the design verification process over the next 3 months, and we plan to start supplies in December or January '25. (Amit Sanghvi, Managing Director)
Q: Are we looking to generic companies over here? Or is it potentially innovators or any of the contract manufacturing companies?
A: We look at contract manufacturers. We're talking about generics and we're also talking about exceptionally large generics. With molecules like Tirzepatide, you also have companies that have a mixed model. They do generic business as well as they are also innovators. (Amit Sanghvi, Managing Director)
Q: Are there any other manufacturers who also have spring-based devices?
A: No, none that can be marketed globally like ours. None that don't have IT challenges. I think ours will be the only device, which is free of infringement or potential infringement. (Amit Sanghvi, Managing Director)
Q: Does Q1 of FY '25 have any contribution of revenue from those orders?
A: No. Q1 FY '25 does not have contribution from the orders we mentioned in the -- in our earlier speech right now. (Amit Sanghvi, Managing Director)
Q: The first question is on this 10 million device. Is this our own IP or is it an IP that we have from other companies?
A: No, it's our own IP. (Amit Sanghvi, Managing Director)
Q: How does the relationship work with the CDMO fill/finish partner? Can you talk about these dynamics?
A: There's 2 parts to completing a program. One is our -- where our part ends is design verification. After design verification, you put the batches on stability. And during stability, various time points of the stability, you have to test your pens for performance or test your combination product for performance, which is what the CDMO partners does. (Amit Sanghvi, Managing Director)
Q: What are the growth opportunities that we are looking at outside of the current driven market? Are we looking into electronics, mobile phones?
A: We're looking at consumer electronics. But again, I think we're at very, very initial stages of evaluating the business. We're talking to several potential customers in the industry. (Amit Sanghvi, Managing Director)
Q: What gives us confidence that our devices won't influence innovative device patents?
A: We've spent about good close to $180,000 conducting the FTO, freedom to operate, on this particular device. (Amit Sanghvi, Managing Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
