Shaily Engineering healthcare growth strengthens as GLP-1 pen volumes lift margins

Investment View and Valuation

Motilal Oswal Financial Services Ltd. (MOFSL), in its August 10, 2026 1QFY27 result update on Shaily Engineering, reiterated its Buy recommendation. The broker has set a revised target price of Rs 4,074, based on 50 times FY28E EPS, compared with a CMP of Rs 3,367.

MOFSL believes the outlook remains robust, supported by volume commitments from key healthcare customers, rising GLP-1 pen volumes and the expansion of pen manufacturing capacity. The earnings miss in 1QFY27 led the broker to reduce its FY27E PAT and EPS estimates by 3 per cent.

1QFY27 Financial Performance

Shaily Engineering reported consolidated revenue of Rs 2,807 million in 1QFY27, an increase of 14 per cent year on year and 18 per cent quarter on quarter, although it was 6 per cent below MOFSL’s estimate of Rs 2,988 million. EBITDA rose 22 per cent year on year to Rs 831 million, while EBITDA margin expanded by 190 basis points year on year to 29.6 per cent. EBITDA was 8 per cent below the broker’s estimate.

Reported PAT increased 17 per cent year on year to Rs 480 million, but was 15 per cent below MOFSL’s estimate of Rs 566 million.

Healthcare Segment Drives Growth

Healthcare was the key growth engine in 1QFY27. Segment revenue increased 84 per cent year on year to Rs 1,424 million and accounted for 51 per cent of total revenue, compared with 31 per cent in 1QFY26. Growth was supported by increasing GLP-1 pen volumes following patent expiry in India and Canada.

Domestic revenue rose 114 per cent year on year to Rs 1,151 million, increasing its share of revenue to 41 per cent. This was driven by supplies of GLP-1 pens to domestic pharmaceutical customers. The higher healthcare mix supported margin expansion despite losses at the UK subsidiary.

Segment Trends and Business Developments

Consumer and Industrial Segments

The consumer segment remained the principal weakness. Revenue declined 24 per cent year on year to Rs 1,155 million because of weak consumer sentiment in the US and Europe. Management indicated that consumer revenue is likely to remain flat in FY27E.

Industrial revenue increased 25 per cent year on year to Rs 227 million. Exports declined 7 per cent year on year, while UK and UAE subsidiary platform-fee revenue fell 73 per cent year on year. Management expects the UK subsidiary to recover strongly over the next few quarters.

Pen Volumes and Capacity Expansion

Management guided for 36 million pen devices in FY27, with potential for upside. Shaily Engineering sold 9 million devices in 1QFY27, of which 50–60 per cent were GLP-1 devices. Dr. Reddy’s volumes remain intact.

• The company has appointed dedicated sales heads for the US and Europe.
• It has received approvals to supply Semaglutide pens in Canada and Brazil.
• It has signed two new IP-led platform projects.
• Additional capacity is expected to take total pen capacity above 75 million units.

Consumer Electronics and Semiconductor Opportunities

In consumer electronics, Shaily Engineering has started small-batch supply of critical products and expects to supply five products for a new customer from 4Q. The company has also acquired land in South India for approximately Rs 1,000 million of capex.

Semiconductor revenue is expected from 4Q through specialised trays, with volume requirements in millions. Both the consumer electronics and semiconductor businesses will be domestic-focused.

Estimates and Financial Outlook

MOFSL increased its FY28E revenue, EBITDA and PAT estimates by 7 per cent, 9 per cent and 8 per cent, respectively, reflecting stronger expected healthcare growth and margins.

The broker expects FY28E EBITDA margin to be above 32 per cent. It estimates FY28E RoE of about 29 per cent, RoCE of about 39 per cent and operating cash flow of approximately Rs 8,000 million over FY26–FY28. MOFSL expects this cash flow to support a roughly fivefold expansion in GLP-1 pen capacity.

Key Risk

The key risk identified by MOFSL is slower-than-expected growth or earnings, which could result in a valuation derating.