Since hitting his low of ₹191 in May 2023, the stock witnessed an impressive appreciation, currently trading with a gain of 184%. During Tuesday’s trading session, the stock reached a new record high of ₹578 per share.
Looking back, the stock over the last decade has delivered a whopping return of 4920%, increasing from ₹10.80 per to the current level.
In a recent note, domestic brokerage firm Systematix Institutional Equities initiated coverage on the stock with a target price of ₹720 per This target indicates a potential upside of 33% from the stock’s recent closing price.
Shaily Engineering Plastics is engaged in the manufacture and sale of customized components consisting of plastic and other materials. Its broad customer base is spread across the healthcare, consumer, personal care, appliance, automotive and lighting industries.
Also Read: Multibagger! Hindustan Copper stock zoomed 118% in just 5 months
The company operates in the niche segment of precision molding and serves demand from global industry leaders in their respective segments.
Systematix Institutional Equities’ optimistic view of the company is driven by the following key factors:
Decades of experience in manufacturing high precision products in niche segments
Established in 1987, the company has diversified its business across various industries such as healthcare, consumer, personal care, appliances, automotive and lighting sectors, serving demand from global industry leaders (led by long-standing relationships with Swedish home furnishing majors Unilever, Gillette, P&G, Sanofi, GE, and Garrett).
The brokerage pointed out that the company’s foray into the steel furniture business helped it diversify its focus beyond plastics and also cemented its relationship with its largest customer. Entry into IP-led insulin pens positions the company among the few global players specializing in such complex products.
Also Read: Top 5 multi-cap stocks offering growth, value and momentum
Consumer (largest) and healthcare (fastest) are the growing segments
The brokerage, citing estimates from CARE Ratings, highlighted that the company generated 85% of its total revenue from the consumer segment, which includes home furnishings, personal care, steel furniture and toys.
It projects that the healthcare industry will witness strong growth on the back of a robust insulin pen order book.
The brokerage noted that Shaily Engineering has forged partnerships with major multinational companies in the design and manufacture of medical devices crucial to the launch of specific GLP-1 superior drugs (the current market for Semaglutide pens, estimated at 200 million pens annually, is predicted to reach 500). million pens by 2030).
Also Read: Nifty 50 to approach 23,400 by June 2024 as seasonal correction matures, says ICICI Rekta
The company’s ability to develop IP and its own pen injectors is expected to strengthen its brand as a research-led solution provider. It currently has five pen-injector platforms for various molecules and is working towards developing an auto-injector.
A ₹1.5 billion in revenue made in the healthcare sector in the last 2 years provides 3x revenue potential in the next 3-5 years.
Strong edges ahead
The brokerage highlighted the company’s robust focus on capacity expansion in anticipation of market demands across various business cycles, which it said has strengthened customer confidence in consistent product supply.
A large cost ( ₹2 billion in the last 2 years) has led to lower capacity utilization and impacted the company’s margins, it added.
With no significant planned capex, the brokerage expects RoCE to exceed 20% by FY26, along with the generation of ₹1.8 billion in free cash flows over the FY25 to FY26 period.
Also Read: 10 small-cap IT stocks rewarded investors with over 140% returns in a year
Overall, it expects the company to post a CAGR of 19% in revenue, 29% in EBITDA and 46% in profit after tax (PAT) from FY23 to FY26 (compared to 14%, 12% and 8%, respectively, from FY18 until FY23).
Disclaimer: The opinions and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
Unlock a world of Perks! From insightful newsletters to real-time stock tracking, breaking news and a personalized news feed – it’s all here, just a click away! Login Now!
Catch all Business News, Market News, Breaking News and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More or less
Published: 05 Apr 2024, 12:43 IST