Motilal Oswal Financial Services (MOFSL) has initiated coverage on Shaily Engineering Plastics Ltd with a “Buy” rating and a target price of ₹3,404, implying a potential upside of around 26% from the current market price of ₹2,695.
The brokerage said Shaily Engineering is undergoing a structural transformation from a traditional consumer plastics manufacturer into a high-margin global healthcare device supplier, driven by opportunities in complex intellectual property-led insulin and GLP-1 injection pens.
According to MOFSL, the company is well positioned to benefit from the upcoming semaglutide patent expiry in March 2026, which is expected to open the market for generic GLP-1 drugmakers. The brokerage noted that Shaily Engineering is currently the sole device supplier in most of its customer engagements related to these products.
The brokerage highlighted that the company is undertaking a major capacity expansion plan, investing more than ₹600 crore to scale up pen manufacturing capacity to over 150 million units by the fourth quarter of FY28.
MOFSL expects the healthcare segment to emerge as the key growth driver for the company, with revenue from the business projected to grow at a CAGR of nearly 50% between FY26 and FY28. The brokerage estimates healthcare revenue could reach ₹880 crore by FY28 and contribute over 50% of total revenue, compared to just 10% in FY23.
Apart from healthcare devices, the brokerage also pointed to optional growth opportunities in niche component manufacturing for the consumer electronics and semiconductor sectors. These expansion plans are expected to be supported by a proposed ₹500 crore fundraising initiative.
On the financial front, MOFSL expects strong earnings momentum for the company, projecting revenue, EBITDA, and profit after tax CAGR of 29%, 38%, and 43%, respectively, over FY26-28. EBITDA margins are expected to improve from 28.2% in FY26 to over 32% by FY28.
The brokerage also expects Shaily Engineering to maintain healthy return ratios, with return on equity (RoE) and return on capital employed (RoCE) estimated at around 28% and 36%, respectively, by FY28.
Motilal Oswal said the stock is trading at attractive valuations for a high-precision manufacturing and healthcare-focused growth story. The target price of ₹3,404 is based on a valuation of 45 times FY28 estimated earnings.
However, the brokerage cautioned that the stock’s strong past returns could make valuations sensitive to any near-term earnings miss or execution-related concerns.
Disclaimer:
This article is for informational purposes only and should not be construed as investment advice. The views in the article are of the broker’s own and not of the publication house.