Release Date: October 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 22% to INR192 Crores in Q2 FY25.
- The healthcare segment saw a significant increase, growing by 94% year-on-year, contributing to improved gross and EBITDA margins.
- The company has doubled the size of its team in Shaily UK, indicating a strategic focus on expanding its capabilities in the healthcare sector.
- EBITDA grew by 56% year-on-year to INR41.3 crores, with margins increasing by 460 basis points to 21.5%.
- The company is actively expanding its contract manufacturing capabilities, particularly in the medical devices sector, which is expected to comprise 25% of revenues over the next three years.
Negative Points
- Machine utilization rates remain relatively low at around 42% in Q2 FY25, indicating potential underutilization of capacity.
- The company faces challenges in scaling up capacity quickly enough to meet the growing demand in the device business globally.
- There is uncertainty regarding the timing of commercial launches for new products, with some expected to spill over into FY26.
- The company has not disclosed specific pricing details for its products, which could impact transparency and investor confidence.
- There are risks associated with FDA audits, which could potentially impact operations if any significant issues are found.
Q & A Highlights
Q: Can we expect our volumes in insulin pens to double for the second half of this year?
A: Amit Sanghvi, Managing Director, confirmed that they expect pen volumes to double in the second half, with production starting in December after the installation of new tooling.
Q: Are we behind in terms of CapEx for the device business, and do we plan to raise capital for consumer business expansion?
A: Amit Sanghvi acknowledged that capacity build-up is slightly behind market needs but emphasized that the opportunity is not lost. Sanjay Shah, Chief Strategy Officer, mentioned they are exploring consumer business opportunities and will decide on funding once requirements are clear.
Q: What are the risks and opportunities in the GLP-1 market, and how are you preparing for them?
A: Amit Sanghvi highlighted the changing demand in the GLP-1 market and the need for capacity build-up. They are preparing to manufacture 35 million pens annually and are confident in their operational capabilities and quality management systems.
Q: How is Shaily Engineering Plastics Ltd recruiting talent to support the healthcare division's growth?
A: Amit Sanghvi stated that they have recruited a large tooling team and are focusing on manufacturing and tooling in India. They are also looking for senior management on the operations side.
Q: Can you provide insights into the pricing differential for pens manufactured in India compared to competitors?
A: Sanjay Shah declined to disclose specific pricing details but mentioned that their spring-driven pen technology allows them to price competitively, potentially at a premium compared to competitors.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
