Operator: Ladies and gentlemen, good day. You all have been connected to Q2 and H1 FY 2027 earnings conference call of Shaily Engineering Plastics Limited. The call will begin shortly. Please stay connected. Ladies and gentlemen, good day and welcome to Q2 and H1 FY 2027 earnings conference call of Shaily Engineering Plastics Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Before we begin, a brief disclaimer. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on the date of this call.
Operator: These statements are not the guarantees of future performance, and it may involve risks and uncertainties that are difficult to predict. I now hand the conference over to Mr. Amit Sanghvi, Managing Director of Shaily Engineering Plastics Limited. Thank you, and over to you, sir.
Amit Sanghvi: Thank you very much. My apologies to everyone on the call for running a few minutes late. Good afternoon, and thank you for joining the Shaily Engineering Plastics Limited earnings call for the second quarter and first half of FY 2027. With me today are Sanjay Shah, our Chief Strategy Officer, and SGA, our investor relations advisors. Our results and investor presentation for the quarter ended 30 September 2026, have been filed with the stock exchanges and are available on our website as well. I trust you have had a chance to review them. Let me start with the headline numbers. Consolidated revenue for Q2 FY 2027 was INR 320 CRORE, up 24% year-on-year and 14% sequentially. This is our highest-ever quarterly revenue. EBITDA rose 25% year-over-year and 22% sequentially to INR 102 CRORE at a margin of 31.9%.
Amit Sanghvi: Importantly, this is the first time we have crossed the INR 100 crore EBITDA milestone in a single quarter. Three points define this quarter. First, healthcare is now the primary engine of our business, contributing 55% of revenue and growing 78% year-on-year. Second, gross margins recovered to 60%, about 70 basis points higher than a year ago, following the cost pressures we highlighted in Q1. Third, the consumer business has finally stabilized over two sequential quarters, although it continues to operate below last year's levels. The quarter was shaped by certain geopolitical uncertainties, input cost volatility, and divergent demand trends across markets. Development in West Asia continued to impact freight cost and polymer prices, while demand for home furnishings in Europe and the US remained subdued.
Amit Sanghvi: We navigated these pressures through pricing discipline, procurement efficiencies, and a favorable product mix, prioritizing margin resilience and quality of returns over volume-led growth in consumer. The global GLP-1 market is also entering a significant phase of transition. With semaglutide patent protection expiring in the first wave of markets, generic competition is gaining momentum. Launches commenced in India in March, followed by Canada's approval of a generic in April, and Brazil's approval of its first generic in August. The resulting price reductions are widening patient access to these therapies and increasing volume. For Shaily, this represents a significant opportunity. As affordability improves and patient access expands, demand for drug delivery devices is expected to grow. With established partnerships across multiple customers and geographies, we are strengthening our platforms and scaling capacity, including through our Abu Dhabi facility, to capture this next phase of market growth.
Amit Sanghvi: Let me turn to segments, starting with healthcare. Revenue stood at INR 175 CRORE in Q2, up 78% year-on-year. Healthcare contributed 55% of revenue compared with 38% a year ago. For the H1, healthcare revenue was INR 318 CRORE, up 81%. Growth was led from our pen injector platforms, particularly the GLP-1 programs, alongside steady volumes in insulin and other therapies. We have delivered 10.4 million devices in the quarter and remain on track to exceed our full-year guidance of 36 million devices. These results reflect the strength of our customer partnerships, our engineering capabilities, and our ability to scale complex device programs with consistent quality and precision. On the innovation side, innovation has been central to the development of Shaily's healthcare business. From the outset, we have focused on building our own IP-led platforms, creating differentiated solutions for our customers and patients. We continue to build on this foundation.
Amit Sanghvi: During the quarter, we signed two new contracts for these platforms and launched our latest innovation, the Toby Reusable Auto-Injector, our two-step reusable auto-injector for next-generation GLP-1 therapies. Toby Reusable retains the same simple two-step interaction of our Toby Disposable Auto-Injector while introducing a multi-use format. The prefilled syringe is housed in a single-use syringe pod, which attaches to the main mechanism the patient retains and reuses for over 200 injections. The device delivers medication subcutaneously and incorporates a needle lockout mechanism for added safety. The pod is made entirely from a single material and can be made out of recycled materials as well, making it very easy to recycle as well as sustainable. Compared with the fully disposable auto-injector, Toby Reusable is designed to reduce material consumption, energy use, shipping, as well as cold chain requirements.
Amit Sanghvi: Our initial assessments indicate that conservatively, it is 70% more sustainable than a disposable two-step auto-injector. It combines the convenience of a disposable device with the material efficiency advantages of a reusable system. For a weekly therapy that patients may use over several years, this is very meaningful. It demonstrates how thoughtful engineering can address not just the delivery of a medicine, but also the patient experience, cost of treatment, and environmental footprint. These are increasingly important considerations for patients, payers, and our pharmaceutical partners across the world. We are also extending our platforms beyond GLP-1 into new therapeutic areas, with a particular focus on emergency use and oncology. While GLP remains our largest growth driver, broadening our presence across therapeutic areas will make our healthcare business more diversified and resilient over time.
Amit Sanghvi: In emergency use, a device has one critical responsibility: to deliver the full dose the first time, often in stressful circumstances and in the hands of someone without medical training. There is very little margin for error. This is fundamentally a precision engineering challenge, and one that plays directly to Shaily's strengths. In oncology, an increasing number of biologic therapies are moving from intravenous infusion to subcutaneous injection. This transition calls for devices engineered to handle larger volumes and higher viscosities. We are developing our platforms to address these more demanding drug delivery. Getting to consumer and industrial, consumer revenue was INR 116 crore, down 14% year on year and flat sequentially. During the quarter, we received business confirmation for a new product from an existing customer and for higher volumes of an existing product from another customer.
Amit Sanghvi: A few product lines, which still represent a relatively small part of the segment, continue to grow rapidly. Industrial revenue grew 23% year on year to INR 29 crore, driven by customers in automotive, appliances, and consumer electronics. During the quarter, we received business confirmation for seven new power tool products and new knobs from an appliance customer. Semiconductor tray revenue remains on track to commence in Q4 2027 from our existing facility. Consumer electronics and semiconductor packaging represent another important engine for Shaily. Commercial supplies have commenced for consumer electronics, and we are progressively scaling production of the five components awarded by our new customer. We would start trial production of semiconductor packaging in Q3 FY 2027, expect to start commercial shipments in Q4. In parallel, we are pursuing a significant scale-up opportunity in both these segments, which we expect to unfold over the next 36 months.
Amit Sanghvi: This business calls for many of the same capabilities that underpin our medical device business: tight tolerances, high cosmetic standards, rigorous process control, and consistent quality across millions of components. These capabilities are a result of sustained engineering investment, process discipline, and a strong focus on customer requirements. We see considerable potential to leverage these strengths in a new market. Our approach will remain measured and disciplined, with the capacity expansion aligned to customer commitments and the pace of business development. I will update you as we achieve key milestones. As we enter the second half of FY 2027, our priorities are clear. We will focus on five areas: ramping up our newly commissioned capacity, exceeding our full-year device guidance, advancing our platforms in emergency use and oncology, progressing the consumer electronics and semiconductor packaging scale-up opportunity, and importantly, maintaining margin discipline as we grow.
Amit Sanghvi: We remain confident in the underlying strengths of our business, our engineering capabilities, our growing portfolio of proprietary platforms, our customer partnerships, and our ability to execute with precision and consistency at scale. Our ambition is to build Shaily into a global innovation-led engineering and manufacturing partner, creating lasting value for our customers, patients, and shareholders. With that, I will now hand over to Sanjay, who will take you through the operating and financial highlights in more detail. Thank you very much. Over to you, Sanjay.
Sanjay Shah: Thank you, Amit. Good afternoon, everyone. Let me take you through the operating and financial highlights for the quarter. The changing mix of our business is now reflected in our improving capacity utilization and operational productivity. Machine utilization across our plants rose to 52.5% in Q2 compared to 47.8% a year ago. This reflects the growing contribution of our high-value healthcare business and our ability to drive greater productivity from our existing manufacturing base. Exports accounted for 62.9% of revenue in H1 FY 2027 compared to 71.7% in H1 FY26. The shift is primarily attributable to growth in the healthcare business, where we supply Indian pharma customers who in turn serve global markets. While the reported export mix has changed, our participation in global markets continues to expand through these customer relationships. Our financial position continues to strengthen with returns improving further in the first half.
Sanjay Shah: In October, CARE Ratings reaffirmed our long-term bank facilities at CARE A+ with a stable outlook and upgraded our short-term facilities to CARE A1+ from CARE A1. The upgrade reflects our healthy operating margins, improving leverage and debt coverage, and new business secured from both existing and marquee customers. It is a strong endorsement of our financial discipline, execution capabilities, and growing customer confidence. Consolidated financial highlights for Q2 FY 2027. Revenue was INR 320 CRORE compared with INR 257 CRORE in Q2 FY26, up 24% year on year. EBITDA rose to INR 102 CRORE from INR 82 CRORE in FY26, up 25%. EBITDA margins were at 31.9% compared with 31.8% in Q2 FY26. Profit after tax was INR 61 CRORE compared with INR 51 CRORE in Q2 FY26, up 20%. PAT margin was 19.2% compared with 20% in Q2 FY26. Segment revenue for Q2 FY 2027.
Sanjay Shah: Healthcare revenue rose to INR 175 CRORE from INR 99 CRORE, up 78% year on year. Consumer revenue was INR 116 CRORE, down 14% year on year. Industrial revenue rose to INR 29 CRORE from INR 23 CRORE, up 23%. On the consolidated financial highlights for H1 FY 2027, revenue was INR 600 CRORE as compared to INR 503 CRORE in H1 FY26, up 19% year on year. EBITDA rose to INR 185 CRORE from INR 152 CRORE, up 22%. EBITDA margin improved by 60 bps to 30.8%. Profit after tax was INR 109 CRORE compared with INR 92 CRORE in H1 FY26, up 18%. PAT margin was 18.2% compared with 18.4% in H1 FY 2027. Cash PAT was INR 138 CRORE, up 19% from INR 116 CRORE. ROCE and ROE were at 41.1% and 29.7% respectively as of 30 September 2026. Debt to equity was 0.2x and the fixed asset turnover was 2x as of 30 September 2026. Segment revenue for H1 FY 2027.
Sanjay Shah: Healthcare revenue rose to INR 318 CRORE from INR 176 CRORE, up 81% year-on-year. Consumer revenue was INR 231 CRORE compared with INR 286 CRORE in H1 FY26, down 19%. Industrial revenue rose to INR 51 CRORE from INR 41 CRORE, up 24%. That concludes my update. We will now open the floor for questions.
Operator: Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Ritesh Shah from Investec. Please go ahead.
Ritesh Shah: Hi, sir. Thanks for the opportunity and congratulations for a good set of numbers. I have multiple questions. First is, you indicated on Toby. Just wanted to understand how it will widen our TAM, what gives us comfort that it won't decimate our existing product basket. If you could add some comments with respect to pricing and profitability over here, that would be great. Lastly, indications besides GLP-1 that it can actually treat. That's the first question. Second, you did touch upon emergency auto-injectors, but is it possible to give some timelines with respect to monetization or launch for on-body auto-injector, which is Mira, emergency auto-injector? I think on the last call, you had indicated about i-Applicator as well. That's the second question, three parts. The third question is more of a clarification.
Ritesh Shah: I think there is a news flow with respect to one of the Ministry of Health advising a recall with respect to product impurities, incorrect dose display, and batching errors. I think these are the three variables which have been indicated. If one goes into further detail over here, it does indicate incorrect dose display as well as incorrect dose delivery. Just wanted to have clarification that this is something which doesn't impact Shaily, and if it does, then what is the impact it would have? Thank you. These are the three questions.
Amit Sanghvi: Thank you. All right. I got to remember all the questions, Ritesh. On the pipeline, look, I think we are close to finalizing a customer for the on-body Mira, post which we will have a 14-month timeline to deliver clinical batches, which means the product will be fully design verified, and we will deliver clinical batches. But we have not finalized the customer yet. Moving on to Toby emergency use, we have two active customers on emergency use for whom we are developing this product. From a timeline perspective, the clinical batches are due end of
Amit Sanghvi: 2027, which means that earliest commercialization to production will be probably end of 2028, calendar 2028. Now, on to Toby reusable, whether it cannibalizes our existing market or not. To be honest, I do not think so. There is a place for pens, and there is a place for auto-injectors. The reason auto-injectors are widely used is because how easy they are to use, especially when you have fixed-dose therapies. You do not want to go through the process of dialing, putting on a needle, et cetera, et cetera. So, the idea behind Toby reusable is to find a way to give the same user use experience with a very significant sustainability angle.
Amit Sanghvi: So, at the moment, if you think about it, just between two large players, one is Mounjaro or Zepbound, and Wegovy, you would be looking at a global auto-injector consumption of over 1 billion injectors that end up in the landfill every year. And to us, increasingly, every large Toby reusable is targeted very much for innovator pharma. Because there is not an innovator that has a reusable auto-injector, it is unlikely that a generic will take it forward. So, A, it does not cannibalize any of our existing product portfolio. B, increasingly, most have commitments to cut waste, become more sustainable, various EU regulations and global regulations that account for it. So, we have a very nice solution where I think you maintain either same or higher, possibly, profitability, but providing a very, very unique solution to the customer, which also then gets a differentiated product on the market, right?
Amit Sanghvi: Because everybody has a two-step auto-injector now. Does that answer your question on the first part?
Ritesh Shah: Yep. Is there any timeline with respect to the tie-up with respect to Toby, or where are we in the process? That was one. I was also hoping for something on i-Applicator.
Ritesh Shah: Yep. Is there any timeline with respect to the tie-up with respect to Toby, or where are we in the process? That was one. I was also hoping for something on i-Applicator.
Amit Sanghvi: i-Applicator is now, is just completed qualifications. We should be in supply by the end of this quarter or early next quarter.
Ritesh Shah: Sure.
Amit Sanghvi: Toby reusable was launched at CPHI. Toby reusable was just launched at CPHI. It is a product where we have completed potentially 80% of development. There are still some bits which are yet to be completed, which we are working on at the moment. But the early launch was with the purpose that if there is interest in the product, which through the three exhibitions that happened in October, we know there is a lot of interest in the product, we can find a partner who then gets to put their stamp on the product in terms of feature, functionality, size, shape, et cetera. We are looking for a partner. As and when we acquire one, we will give you that update. Now, coming to the product recalls announced by some of our potential customers in various markets.
Amit Sanghvi: I cannot comment on the API impurity, because I have no expertise in that domain. As far as the label and dose marking is concerned, it is the same problem. Essentially, there is a variant of the pen which had an incorrect label on it. Therefore, the label indicates one dose, whereas the pen actually is for another dose. This has no bearing or there is nothing attributed to Shaily for this particular recall. It is the end, whoever are essentially either final assembly or packaging or the distributors that are attributing to this particular issue.
Ritesh Shah: So, just to clarify, when the document says incorrect dose delivery, basically, there is nothing to do with the device. It is more with respect to the labeling. Would that be a fair understanding?
Amit Sanghvi: Yeah, because your label will state the dose the pen is supposed to deliver. But the pen actually is a different SKU. It is not that SKU. So, there is incorrect labeling on the pen. Does that clarify?
Ritesh Shah: Sure. Just a follow-up. That is clear.
Amit Sanghvi: Yeah.
Ritesh Shah: And this will not have any impact on our volumes, say, Q3, Q4, or going forward, if at all?
Amit Sanghvi: No, our demand is strong, even stronger, to be honest. That is where we are focused right now on the. We have just installed the Neo line, which we are now getting into qualifications next week.
Ritesh Shah: Sure. I will join back with you. Thank you so much for the answers.
Ritesh Shah: Thanks.
Operator: Thank you. The next question is from the line of Harsh Shah from JM Financial PMS. Please go ahead.
Harsh Shah: Yeah. Hi. Thanks for the opportunity. A couple questions from my side. Amit sir, if you could give some color as to what sort of feedback we would have received from a number of trade fairs that we participated recently. Basically, what I am trying to understand is it something that the potential customers are asking from us, which probably we would not right now have, say, maybe related to certain specific therapy or anything else, something on that from the potential customers?
Amit Sanghvi: There's, I think I mentioned in one of my previous calls, there's about 60-odd GLP-1s under development for various indications. Eventually, all of them end up in either, or 80% of them are injectables, which means they'll end up in either a pen or an auto-injector. A two-step auto-injector is a two-step auto-injector, whether you buy it from us, one of our competitors, or anyone else. There isn't a differentiation, and after single use, they end up in the landfill. As I was telling Ritesh, the reason people like it is because it's very easy to use. You have only two steps to basically pull the cap off and inject, and you're done with it.
Amit Sanghvi: We wanted to maintain that same usability, but offer a differentiated solution and something that doesn't There's a very significant cost associated with cold chain, with the amount of material that is being disposed of. If you look at a size of one pack of auto-injector, we could put four pods in the same size. Essentially, if it's once-weekly therapy, then your cold chain costs are down to 20% to 25%.
Harsh Shah: Okay.
Amit Sanghvi: Your material consumption is down to maybe 20%.
Sanjay Shah: Even the logistics cost of distributing it.
Amit Sanghvi: Yeah.
Sanjay Shah: Yeah.
Harsh Shah: I see. How was the overall feedback in the trade fairs?
Amit Sanghvi: Very high. I mean, feedback has been very good. We, in fact, had subsequent meetings with potential customers to showcase the product on a one-to-one basis.
Harsh Shah: Okay, got it. Secondly, if I circle back to your previous concalls, even the latest annual report, and even in the AGM, there seems to be a lot of confidence that you all have regarding an innovator that you would probably crack in. What I am trying to understand is that, at what stage of discussion are we with the innovator? Is it something safe to assume, say that, by end of calendar year 2027, at least we could have one or two innovators onboarded?
Amit Sanghvi: Look, that is where all the efforts are. Conversations are also good. We are participating in RFQs. We are doing as much outreach as we can. I am fairly confident that, yes, by the end of calendar 2027, we should be able to crack one or two innovators. Having said that, when you crack an innovator, the revenue is not going to start flowing from 2028. It is going to be a three to four-year journey before you see revenue flowing.
Harsh Shah: Yeah. Got it. Thirdly, similar to I was going through your last 3 annual reports. There is a proper mention of aerospace and defense as a tangible opportunity for us. I am aware that you are kind of, your hands are full, you have a lot to do. But just as a clarification, are we kind of either looking into these segments, or are we supplying indirectly some of the high-precision components?
Amit Sanghvi: I think, look, we have been supplying indirectly some of the high-precision components for quite a long time. But have we made any headway in that, in aerospace and defense? The answer is no, we haven't.
Harsh Shah: Got it. Okay. Just last question from my side before I get back in the queue. On the consumer electronic part, in the segment, just wanted to check, are we engaging in discussions with other potential customers as well? Or the focus is currently to kind of ramp up with this, the customer who gave us 5 components? Yeah.
Sanjay Shah: Harsh Shah, if you look at the last 2 concalls, what we have said is we were working with one customer. We are adding 5 components with another customer, and we will look at other customers also as we go and ramp up that business.
Amit Sanghvi: We already have two customers.
Sanjay Shah: We are in discussions.
Amit Sanghvi: We cannot make any disclosures in terms of customer names and whatnot, but yeah, we are working with multiple potential customers for scaling up the business.
Harsh Shah: But just to follow up on this, is there a possibility that our CapEx for the consumer electronics as a start could be in excess of INR 100 CRORE? You did mention that minimum would be INR 100 CRORE, but is there a possibility of doing even more as a start?
Sanjay Shah: Harsh, it is a little too early to talk about it.
Amit Sanghvi: Yeah, I think it is a little early. Second, looking at all the discussions we have had, I think INR 100 crore still makes good sense.
Sanjay Shah: Yeah.
Amit Sanghvi: Whether 100 goes to 120 or 80, I do not know, but that is going to be about that.
Harsh Shah: Sure. That is it from my side. Thank you.
Operator: The next question is from the line of Vineel Shah from Dalal & Broacha. Please go ahead.
Vinil Shah: Yeah. Thank you for taking my question, and congratulations on a good set of numbers. My first question is in regard to the healthcare group. Last quarter also you had indicated that the FY 2027 volumes would exceed 36 million pens. Now that we are seeing good growth and with our internal bottlenecks also easing out, do we wish to revise our guidance? Is there a further higher speed, higher rate of growth we are expecting in the healthcare segment?
Sanjay Shah: I think we will exceed the guidance. Now, how much we exceeded by, I have no clue. Short answer, we are not in a position where the pressure on ramp-up has eased off. It is easing off. It has not eased off. So, it is still work in progress. Maybe end of this quarter when we have our next call, we will be in a better position to answer that question.
Vinil Shah: Okay, good. Just one clarification I wanted. The capacity expansion which we are planning for Abu Dhabi, it shall be ready by end of FY 2028. Is my understanding right?
Sanjay Shah: Correct. You are right.
Vinil Shah: And sir, my other question was related to our other expenses for this quarter. If we see, it has been a rise of 45% QOQ. Is this because of our changing revenue mix, or is there some one-off or OpEx which we are putting ahead of the new capacity expansion? Could you just give some color about this?
Sanjay Shah: Could you probably repeat your question because we lost your voice in between?
Vinil Shah: Okay. I was saying that our other expenses for the quarter have risen 45% QOQ. I just wanted to understand that, is this because of change in the revenue mix, or is there some one-off cost or a specific OpEx which we are putting in ahead of the new capacity? Just wanted to understand what will be the recurring cost base for us going forward.
Sanjay Shah: Other expenses basically include a host of expenses as there will be some one-off costs which would have been incurred. But then, yes, if you were to compare it against the last quarter, there is a change in the business mix for which there would be some higher expenses which would have been there. So, it is a combination of one-off expenses and some increase in expenses.
Vinil Shah: Would you like to quantify the one-off expenses?
Sanjay Shah: I do not think I will be able to quantify that currently.
Vinil Shah: Okay, sir. Thank you, I guess, sir. I will join back the queue.
Sanjay Shah: Excellent, cool.
Operator: Thank you. The next question is from the line of Akhil Parekh from 360 ONE Capital. Please go ahead.
Akhil Parekh: Thanks for the opportunity. My first question is on the capacity. From the end of FY28, while this 25 million pens capacity, when should we start expecting the commercial sales from it?
Sanjay Shah: Commercial sales for which capacity?
Akhil Parekh: The 25 million pens capacity which we added.
Sanjay Shah: Yeah, it starts qualification next week. If all goes well, we should be in a position to start selling from that capacity in December.
Akhil Parekh: Okay, sure. Secondly, consumer segment, is it fair to assume we have bottomed out in terms of the quarterly revenue perspective, and from here on, bare minimum, we should see what we delivered over last two quarters and maybe grow over that number basically in subsequent quarters? Is that a fair assumption?
Sanjay Shah: I think Akhil already mentioned that we see that business steadying at a level. So, I think this year we think it will probably steady at this level, and then depending on how geopolitics and the business situation plays out, we should basically see that growth next year. We had also indicated, I think in the Q4 call, if it was a Q1 call, on a net level, I think business will, on the consumer part of it, will remain flat currently.
Akhil Parekh: Got it. Two more questions from my side. One on the subsidiaries, right? If I look at consol minus standalone, our subsidiary is recurring losses for last three quarters. How should one read that particular number?
Sanjay Shah: It is making a loss for the last two quarters. There has been some revenue which we have not recognized in Q2, because as we have said last time also, there was some customer confirmation spending which had not come in. But I think on an overall basis for the whole year, we would not have a loss.
Akhil Parekh: Okay. Lastly, on the semiconductor trays and consumer electronics-
Sanjay Shah: Again, there is a bit of background noise.
Akhil Parekh: One second. Is it better now?
Sanjay Shah: Yeah.
Akhil Parekh: Yes. This last one, the semiconductor trays and consumer electronics segment, any ballpark or directional sense you would like to give how this business will look like, say, a year down the line, FY28, what numbers we can build in from these two segments?
Sanjay Shah: I think Amit already mentioned in his speech in terms of what we are looking at. Giving numbers right now would be a little difficult, but on consumer electronics, what we are looking at is basically starting supplies of the parts components which we have taken in Q4, between Q3 and Q4. On semiconductor, start qualification with customers and then start commercial shipments from Q4, FY 2027.
Akhil Parekh: Sure. If I can squeeze in one last question, with regards to innovators, Amit mentioned that it is a process of 3 to 4 years after the approval where we get contribution. Is it because the innovators want more suppliers as a backup? Is that the reason why we might take 3, 4 years for them to kind of meaningfully contribute to the revenue, or is there a capacity build-up happening at the innovator's end, and hence we might see a healthy quarter over a period of time?
Amit Sanghvi: A chance to participate, it is very unusual that you get a chance to participate on an existing molecule. What you do is you participate on a new molecule. When you participate on a new molecule, you are entering at about phase II, phase III of the customer. From there, the journey to their own approval is 3 years.
Akhil Parekh: Sure. Okay. This is very clear. Thank you so much.
Amit Sanghvi: Thanks.
Operator: Thank you. The next question is from the line of Aman Vij from Astute Investment Management. Please go ahead.
Aman Vij: Good evening, Amit. My question is on the Brazil, Turkey, and Mexico market. Could you give a rough timeline in terms of launch of our products in this market, and what kind of market share we can get here? I believe Canada, we have maybe 50% plus, but what about these markets?
Amit Sanghvi: No, Canada, I think we, at the moment, we have 100%.
Aman Vij: 100%.
Amit Sanghvi: I am not aware of any generic player in Canada which is not on our product. Yeah, but not to sound arrogant or anything. I think we have approval in Brazil. We have it in Canada. We are supplying to multiple other smaller geographies. As far as Turkey and Mexico are particularly concerned, I do not have a timeline, but I would assume that first mover's advantage will follow in those markets as well.
Aman Vij: Okay. Second question is, so you are increasing your guidance to 36 million pens for this year. What is the reasonable estimate as of now for, say, next year, FY 2027? Should we assume 50 million kind of number, or should we assume higher or lower?
Amit Sanghvi: Difficult to answer, Aman. For this year particularly, our second line is, look, is starting qualification. Fingers crossed, everything goes well. But in terms of what we could potentially do in the current financial year, I do not think we are in a position to answer that in the next call. I hope we can answer it then, but at the moment, we are not in a position. We will exceed 36 million. That, I think there is a fair bit of confidence. As far as next year is concerned, the number you stated, give or take 15% is what we are targeting. Could be higher, could be lower. We do not know. Again, it is not a guidance. Markets are still launching, so at the moment, you only have three markets where the product is launched. We still do not have enough data to comment what next year is going to look like.
Aman Vij: Sure. Thank you for answering the question.
Operator: Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please limit your questions to two per participant. Should you have follow-up questions, please rejoin the queue. The next question is from the line of Vishal Manchanda from Systematix. Please go ahead.
Vishal Manchanda: Hi. Hi, good evening, and thanks for the opportunity. On your pen guidance for the year, what percentage of that would be GLP-1 pens, or is that entirely GLP-1 pens?
Amit Sanghvi: No, it is not entirely GLP-1. I think the split this year, at the end of the year, is likely to look at potentially 70/30.
Vishal Manchanda: Okay. Is there growth in insulin pens as well, or largely the growth is going to come from the GLP-1s?
Amit Sanghvi: No, next year we should be back on track with insulin. I mean, look, it is a priority issue right now. So we have prioritized GLP-1 over insulin, but with the added capacity, we should be in a position to take additional quantities for insulin next year.
Vishal Manchanda: Okay. Would you have a sense as to what percentage of your GLP-1 supplies is meeting the domestic demand and the exports? How would that be split?
Amit Sanghvi: Vishal, when we supply a pen to a customer, it is the same pen which is for all the different markets. So, we probably not have a split in terms of what is the customer selling in India, what he is exporting it out.
Vishal Manchanda: Okay. And just one final one on semiconductor packaging.
Operator: I am sorry to interrupt you, sir. If you have follow-up questions, please rejoin the queue. The next question is from the line of Bhavika from Niveshaay. Please go ahead.
[Analyst] (Niveshaay): Yeah. Thank you for the opportunity. So the first question I have on the pricing, like if I take the healthcare revenue per device has gone up this quarter, like around 158, then the last quarter. Sorry, the 168 from the last quarter, which was around 158. So wanted to understand that, is it led by the GLP pen prices? Because I think in the previous call, you have mentioned that we have already facing like 10% to 15% pricing pressure in the pen. So, just wanted to understand overall, like how we see the price decline happening over next 2 years, and how much we can absorb by holding the margins of what we are currently doing?
Sanjay Shah: I will let probably Amit answer the second part of the question or the fourth part of your question in terms of average price. When you look at average price, it is a combination of all the supplies which we are doing. It is not one standard price across different devices which we do. At the same time, we used to do insulin on a contract manufacturing for a customer last year, which we are not doing in the current year. So, which is and that capacity has been replaced by GLP, but the realizations would be higher. So, that is the reason for the change in the price when you look at an average price. Amit, you want to answer the second part of the question?
Amit Sanghvi: There is pricing pressure, and for all the long-term contracts that we currently have in place, a price erosion has already been built into that contract. I am very confident we will be able to maintain our margins. I would say we will maintain our margins primarily because there is no operating leverage that has kicked in yet. We are still operating, if you look at capacity utilization, you are at 52%, I believe. So, you have a fairly significant operating leverage that is yet to kick in. Material prices, we do have an index mechanism with our pen pricing where at least the inflationary measures will be passed on. So, even with erosion at a baseline, you will have not a situation where you are going to end up losing out on your margins.
[Analyst] (Niveshaay): Got it. For the second, I want to understand because now we are also building on-body injectors, which I think you have mentioned in the last call that we will be able to do around like 15% to 35%, like in one devices, like compared to it is a high realization pens compared to the GLP-1. But in volume terms, it is less, like 1 to 2 million. So, just wanted to understand what is the market size like? Do we see the market size of this on-body injectors? Because if I look at the oncology as an industry, it is going quite well. So, do we see the penetration of this pens happening, and who are the competitors for us in this particular segment of pens?
Amit Sanghvi: I think right now you have, if I am not mistaken, I think you have about three molecules on-body injectors, three or four molecules on-body injectors. The one that is going to be targeted by generics is Neulasta. Then you have some recent launches for monoclonal antibodies by Sanofi in this enFuse on-body system. So, we see increasingly therapies going towards on-body, but do not have a clear answer in terms of what that is going to look like in total volume.
[Analyst] (Niveshaay): Okay. What margins we are expecting for that category of pens?
Amit Sanghvi: I think margins, it is directly correlated to the volume and the complexity. On-body obviously tends to be highly complex, which means that you have a high CapEx and a higher developmental cost. But yeah, once you get into supply, the margins are higher, far higher than that of GLP-1s. But it is also because that there is an extra, there is a high CapEx cost upfront.
[Analyst] (Niveshaay): Got it. Looking at the current-
Operator: I am sorry to interrupt you, ma'am. If you have follow-up questions, please rejoin the queue.
[Analyst] (Niveshaay): Okay.
Operator: The next question is from the line of Rupesh Tatiya from Longequity Partners. Please go ahead.
Rupesh Tatiya: Yeah. Thank you. Thank you for the opportunity. Congratulations, Amit, for a very good set of numbers. My first question is, I mean, our auto-injectors, how do they work on, let's say, biologic or biosimilars? Are there any programs where we involved with such a product? The corollary to that is, are there any products in the pipeline which can eventually give us, let's say, 40, 50 million volume, pen volume eventually in, let's say, 2, 3 years? Because I know the field is really small. There might be handful molecules which can go to 40, 50 million pens, but are you working on any of them? So, these are the two questions. Yeah.
Amit Sanghvi: I believe every molecule we are working on in pens and auto-injectors have far higher potential than 40, 50 million. You see, I mean, just look at between semaglutide and tirzepatide, you have 1.5 billion devices potentially being made every year. So, most of that volume comes from auto-injectors, not from pens, because US is 100% in auto-injectors as far as Wegovy and Zepbound and Mounjaro are concerned. I don't think US has a pen for these products yet. So, I mean, even today, we're supplying auto-injectors in the Middle East at a volume of, I believe, 6 to 7 million a year.
Rupesh Tatiya: Just in one market?
Amit Sanghvi: I mean, that's-
Rupesh Tatiya: Or one
Amit Sanghvi: Yeah, yeah.
Rupesh Tatiya: Sorry. Sorry, maybe it came out a bit wrong. I am not questioning the potential of semaglutide. I am asking for the new. I mean, is there another molecule which can become as big as semaglutide? That is essentially the question, be it biologics, biosimilar, or any non-GLP therapy.
Amit Sanghvi: Look at the generic. I mean, look, novel molecules is, every novel molecule that is, especially in the GLP-1 category, has the potential to become 50 to 100 million at a reasonable number. Now, if we look at generics, you must have read recently, there is quite a few generic players now targeting Keytruda. So, that will be another area where we participate with an auto-injector.
Rupesh Tatiya: That is good to know. Second question is, on the UK subsidiary, if I do consol minus standalone, the EBITDA loss is roughly INR 7 crore for H1. You are saying that we will be EBITDA positive as well as PAT positive for the full year. Is that a fair
Sanjay Shah: Yes
Rupesh Tatiya: understanding?
Sanjay Shah: Yes.
Rupesh Tatiya: Okay. Yes. Okay. Okay. Thank you. I will come back in the queue.
Operator: Thank you. The next question is from the line of Raghav Mittal from Dhamma Capital. Please go ahead.
Raghav Mittal: Hi. Thank you. Thank you for the question. I want to ask you, Amit, about your semiconductor trays. From what we understand, there is the JEDEC trays, and there is a ball grid array, and then there is tape, and also IC tubes. I just want to understand what is the strategy? What kind of products are we going to target? Given the Malaysian and Chinese competitors here, how do we position ourselves to our customers that they feel compelled to buy from us versus others? The product, pricing, and any sort of volumes that we are targeting when we have here.
Sanjay Shah: Raghav, what we are looking at is basically doing JEDEC trays, carrier tapes, and wafer boxes. There seems to be some background noise. That is what we would be looking at targeting. As we had mentioned in our earlier calls also, we have tied up with a Korean partner who are now one of the large players in this segment of the market, and work with around 150-plus customers globally. From a customer, more acceptance, product acceptance and everything, which will be much more faster, because we are replicating their manufacturing process, which they have in their plants in Korea and Taiwan and India. That is what we would be looking at. Second is, I think from a pricing perspective, we will be competitive against the other players because it is similar products which are there.
Sanjay Shah: Volume, currently, it will be difficult to mention because it will depend on how the ramp-up in India happens. That will decide the volume.
Raghav Mittal: But for our products, what do you think is the packaging material that will be preferred by the Indian customers? Are we going to supply to Indian customers or also export? Because from what we understand, somebody might be using ball grid array, somebody might be using something else. Just want to understand on what percentage of their product portfolio are we going to play in?
Sanjay Shah: With Indian customers also, there are five players who are coming in India currently, all with the OSAT and the TSAT plants. They will be using a combination of JEDEC trays as well as carrier tapes and everything. When we discuss with them, their product portfolio is also evolving. Getting to an exact market size or that is a little difficult right now. But the take is, we are setting up a small capacity to start with, and as we start supplying, we understand the demand, we will add more capacities.
Raghav Mittal: Got it. And the Korean partner, are we going to do like a contract manufacturing, or is it a royalty? Like, how does the tech partnership work? And also, just lastly on this segment, do you expect the margins to be similar to your IKEA business or meaningfully higher or lower? Thank you.
Sanjay Shah: We will currently be doing contract manufacturing and also exporting to them in Korea or Taiwan. From a margin perspective, our take is that it will be better than the average margins on the consumer or the industrial business. So, that's the expectation.
Raghav Mittal: Got it. Thank you so much. All the very best.
Sanjay Shah: Thanks, Raghav. Thank you.
Operator: Thank you. The next question is from the line of Ananya Nichani from Thinqwise Wealth Managers LLP. Please go ahead.
Ananya Nichani: Thank you for the opportunity. I have a couple of questions on the consumer business. First is, how has the demand weakness been in the sense, has it been market-wide or only from the top contributing clients? Second is, how are the price pass-throughs being taken? Like, what percentage of price hikes in polymer prices are you able to pass on, and with how much of lag? Yeah.
Sanjay Shah: The price inflation basically gets passed on with a lag. As we have said earlier on our calls, with different customers, you would have different time lags. With some customers, you would have a lag of 2 months. With some customers, you would have a lag of 3 to 4 months. That is how it happens. Consumer demand in Europe and US is weak. Amit also mentioned about this in his opening remarks. How and when it will improve will depend on how the global situation evolves and how inflation is tackled in these markets. Probably for me to guess on that would be very difficult.
Sanjay Shah: Sure.
Sanjay Shah: What I can add is that if you were to look at last 4 quarters or last 6 quarters, we have been consistently adding newer products with the home in this segment. What we are looking at is basically building up a portfolio and adding more products. As volumes pick up, you basically can do a ramp-up across different products.
Ananya Nichani: Okay, sir. Got it. Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments.
Amit Sanghvi: Thank you very much. In closing remarks, healthcare now contributes 55% of Shaily's revenue and grew 78% year-on-year this quarter, underscoring the strength of this business as our primary growth engine. Innovation remains at the core of our strategy. We are extending our proprietary platforms into new therapeutic areas, including emergency use and oncology, while actively pursuing a significant scale-up opportunity in consumer electronics and semiconductors over the next 36 months. While consumer demand remains subdued in the near term, our strategic priorities remain clear. We will continue to combine engineering ingenuity, precision, and responsible execution to solve complex customer challenges at scale. This is the foundation on which we intend to build Shaily's next phase of growth and create sustainable long-term value for our customers and shareholders. Thank you for joining today's call and for your continued interest and support.
Amit Sanghvi: Should you have any further questions, please reach out to SGA, our investor relations advisors. Thank you once again, and have a great evening.
Sanjay Shah: Thank you, everyone. Good day.
Operator: On behalf of Shaily Engineering Plastics Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
