Shaily Engineering Plastics Ltd. share price target

We initiate coverage on Shaily Engineering Plastics (SHEP) with an Accumulate' rating and a price target of Rs1,103 (21x FY20E EPS). SHEP is a leading supplier of high performance engineering polymers based precision components to leading Home Furnishing, Pharma, Consumer and Engineering companies globally. We are positive on SHEP's prospects due to 1) deeper penetration in existing plastic line (with its Home Furnishing customer's India entry) 2) ramp-up in machine utilisation of CRC plant and 3) foray in to a new product line, enabling it to inch closer to its revenue target of US$ 100mn by FY20E. The company has ~85% visibility for achieving this target....

ICICI Securities Ltd | Retail Equity Research Shaily recorded a Q2FY19 tepid performance with volume growth of mere 2% YoY. We believe the sales growth of ~10% YoY was largely driven by price hike and a change in product mix. According to the management, while the power issue has been resolved in Q2FY19 (which impacted Q1FY19 performance) the labour issue remained intact during Q2FY19. Lower plant utilisation coupled with a delay in passing on higher raw material prices led to a decline in EBITDA margin by ~118 bps YoY to...

ICICI Securities Ltd | Retail Equity Research Shaily recorded a Q2FY19 tepid performance with volume growth of mere 2% YoY. We believe the sales growth of ~10% YoY was largely driven by price hike and a change in product mix. According to the management, while the power issue has been resolved in Q2FY19 (which impacted Q1FY19 performance) the labour issue remained intact during Q2FY19. Lower plant utilisation coupled with a delay in passing on higher raw material prices led to a decline in EBITDA margin by ~118 bps YoY to...

During Q1FY19, revenue growth of 26% YoY to | 89 crore was led by ~35% YoY volume increase. According to the management, while volume growth was lower-than-expected owing to labour shortage and power issues, lower realisation was due to a change in product mix and delay in passing on higher raw material prices. As a result, gross margins declined ~60 bps YoY whereas EBITDA margin declined ~155 bps YoY mainly due to a sharp increase in employee and other cost by 40% and 36% YoY, respectively. The management further guided that power and...

We recently met the management of Shaily Engineering Plastics (SEPL) to understand the business model and outlook, going forward. Incorporated in 1987, SEPL is into the manufacturing of precision component using the high performance polymers. Over the years, SEPL has become the preferred outsourcing partner for Fortune 100 companies by offering total solutions in plastics including development, manufacturing and validation. SEPL's business segment includes home furnishings, automotive, home personal & beauty care, appliances & lightings, medical...