Shaily Engineering Plastics Ltd
NSE:SHAILY
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Mastercard Inc
NYSE:MA
|
Technology
|
| US |
|
UnitedHealth Group Inc
NYSE:UNH
|
Health Care
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Walmart Inc
NYSE:WMT
|
Retail
|
| US |
|
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
318.42
1 519
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Mastercard Inc
NYSE:MA
|
US |
|
|
UnitedHealth Group Inc
NYSE:UNH
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Walmart Inc
NYSE:WMT
|
US |
|
|
Verizon Communications Inc
NYSE:VZ
|
US |
This alert will be permanently deleted.
Shaily Engineering Plastics Ltd
Earnings Call Analysis
Summary
Q3-2024
Shaily Engineering Plastics Limited has navigated a complex global environment to achieve an impressive consolidated top line growth of 15%, with revenue reaching INR 158.4 crores in Q3 FY '24, up 16% year-on-year. Gross and EBITDA margins also improved to 43.9% and 20.8%, respectively. The company's pharma pipeline expansion and innovation in device manufacturing have paid off, with the expectation that the revenue from owned IP devices will significantly outpace contract manufacturing within the next 24-36 months. Additionally, the Healthcare division has secured four new contracts for developing and supplying injectors to major pharmaceutical firms. The company's EBITDA and PAT have seen remarkable growths of 67% and 156%, respectively, during the quarter.
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to Shaily Engineering Plastics Limited Q3 and FY '24 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of the future performance and involve risks and uncertainties that are difficult to predict.
[Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Amit Sanghvi. Thank you, and over to you, sir.
Thank you very much. Good evening, and a very warm welcome to all the participants to the post results earnings call of Shaily Engineering Plastics. I have with me Mr. Sanjay Shah, our Chief Strategy Officer and CFO, and SGA, our Investor Relations advisers.
I hope you've had a look at our investor presentation that is uploaded on our website at [indiscernible].
Let me start looking at some highlights on the operational performance. Despite a challenging geopolitical situation across the globe, we have delivered a robust top line growth of 15% to INR [ 104 58 ] crores on a consolidated basis in this quarter and have improved both our gross margins and EBITDA margins, which stand at 43.9% and 20.8%, respectively.
Our focus over the last several quarters has been to grow our pharma pipeline, increase [indiscernible] innovation as a development engine in India as the manufacturing [indiscernible].
The [ C ] platform portfolio now includes exports and injector for [ teriparatide, ] multi-dose [indiscernible] injectors for insulin, prime-driven and injector for GLP-1 like semaglutide and [indiscernible], disposable and reusable pen injector, a 2-step order in vector for [indiscernible], which is again semaglutide and a 3-step auto injector currently in the final stages of development for tirzepatide.
For this, we also have a device known as Shaily [indiscernible] land, which has meant for delivery of land real time.
We have been very successful in creating a healthy pipeline for [indiscernible] and GLP-1, where Shaily has a very unique advantage on its device versus its competitors. The objective now is to onboard as many customers as possible and procure some commitments on volumes for the future.
We clearly see the revenue contribution from devices, the devices where we own the IP, to significantly increase over the next 24 to 36 months, and will overtake contract manufacturing revenue over the same period.
I'm happy to announce that in the Healthcare division, we have signed 4 additional contracts for development and supplier selling injectors with large pharma companies. We had ventured into carbon steel for the home furnishing [indiscernible], and also added a dedicated facility to service this thing.
During the quarter gone by, we have received additional business by the home furniture maker for 2 projects in [ RBC. ] We have received business confirmations for additional volumes of our current products, and this will improve utilization in the current as well as the next financial year.
We've also received order for supplier of caps by [indiscernible] customer in our Personal Care division.
Our focus continues to develop new businesses and relationships where engineering, precision and quality are the needs and not only price.
That is all from my side. I shall now hand over the call to Sanjay to give you the operating and financial highlights. Thank you very much.
Thank you, Amit. Good evening, everyone. I shall share with you the highlights of our operational and financial performance of Q3 and 9 months FY '24, [indiscernible] which we will be happy to respond to your queries.
During the quarter, we processed 5,223 tons of polymers as against 4,121 tons in Q3 FY '23. For the 9 months ended, we processed 16,718 tons of polymers as against 16,026 tons in 9 months FY '23.
[ Margin ] utilization rate was at 38% in Q3 FY '24 and 40% in 9 month FY '24.
Exports during 9 months FY '24 stood at 74.2% of total revenue.
I shall now brief on the stand-alone results highlights for Q3 FY '24. Revenue stood at INR 144.7 crores during Q3 FY '24 as compared to INR 134.2 crores during Q3 FY '23, a growth of 8%.
EBITDA stood at INR 22.2 crores during Q3 FY '24 as compared to INR 18.2 crores during Q3 FY '23, a growth of 22%. EBITDA margin stood at 15.4% for Q3 FY '24, an increase of 180 basis points over Q3 last year.
PAT stood at INR 6.2 crores during Q3 FY '24 as compared to INR 4.5 crores during Q3 FY '23, a growth of 39% year-on-year. Cash PAT for Q3 FY '24 stood at INR 15.3 crores as compared to INR 12.4 crores during Q3 FY '23, a growth of 23%.
Now coming to 9 months FY '24 highlights. Revenue stood at INR 453.2 crores in 9 months FY '24 as compared to 466.2 crores during 9 months FY '23.
EBITDA stood at INR 71.5 crores in 9 month FY '24 as compared to INR 65 crores during 9 months FY '23, a growth of 10%. EBITDA margins stood at 15.8%, an increase of 180 basis points over 9 months last year.
PAT stood at INR 24.7 crores in 9 months FY '24 as compared to INR 21.3 crores during 9 months FY '23, a growth of 16%. PAT margin stood at 5.5%, an increase of 90 basis points over 9 months last year. Cash PAT for 9 months FY '24 was reported at INR 50 crores as compared to INR 44.6 crores during 9 months FY '23.
Our ROC and ROE stood at 12.9% and 8.2%, respectively, as on 31 December 2023. The potent business has been achieved with the end use of capital.
Our debt-to-equity stands at 0.5x and our long-term debt-to-equity stands at 0.19x.
I shall now brief you on the consolidated results highlights. Revenue stood at INR 158.4 crores during Q3 FY '24 as compared to INR 136.3 crores during Q3 FY '23, a growth of 16% year-on-year.
EBITDA stood at INR 33 crores during Q3 FY '24 as compared to INR 19.7 crores during Q3 FY '23, a growth of 67% year-on-year. EBITDA margin stood at 20.8% for Q3 FY '24, an increase of 630 basis points over Q3 last year.
PAT stood at INR 14.5 crores during Q3 FY '24 as compared to INR 5.7 crores during Q3 FY '23, a growth of 156% year-on-year. PAT margins stood at 9.2%. Cash PAT for Q3 FY '24 was reported at INR 22.9 crores as compared to INR 13.6 crores during Q3 FY '23, a growth of 76% year-on-year.
Now coming to 9-months FY '24 consolidated highlights. Revenue remained flat at INR 473.3 crores in 9 months FY '24 as compared to INR 472.6 crores during 9 months FY '23.
EBITDA stood at INR 87.4 crores in 9 months FY '24 as compared to INR 69.9 crores during 9 months FY '23, growth of 25%. EBITDA margin stood at 18.4%, an increase of 360 basis points over 9 months last year.
PAT stood at INR 48 crores in 9 month FY '24 as compared to INR 25.2 crores during 9 months FY '23, a growth of 50%. PAT margin stood at 8%. Cash PAT for 9 months FY '24 was reported at INR [ 63.6 ] crores as compared to INR 48.7 crores during 9 months FY '23, a growth of 31% year-over-year.
That is all from our side. Now we can open the floor for Q&A.
We will now begin the question-and-answer session. [Operator Instructions] Our first question from the line of Ritesh Shah from Investec.
Congratulations for going to margin profile. First question is, how should we understand the margin profile? Is it the benefit of [indiscernible], which actually gets passed on a detailed basis, which is reflected on the gross margin? Or is it more of the mix more shifting towards pharma? If you could broadly give some color on the mix would be really useful. That's the first question.
Ritesh, when we look at the margin profile, it's a combination of higher revenue from pharma, including platform [ access ] fees, which we charge to customers, and that is what is contributing to the improvement in margin.
If you remember, we have been saying on our investor calls earlier that some of our pharma income could be back ended. And we expect pharma incomes to prominent Q3, Q4 in terms of the development which we have been doing. So that is being realized right now.
Sir, how should one comprehend platform access fees? And will you be able to quantify that amount for the quarter?
You would be able to see that -- if you look at the stand-alone results and the consolidated results, the difference would basically be the platform access fees, which is accruing in the U.K. So that -- the platform access fee.
Platform access fee is basically what we charge to our customers, typically for accessing the platform, [indiscernible] are doing all the validation testing protocols and everything for the device.
Would it be possible for you to guide for an annualized run rate over here? Given it has been bulky. I think we had indicated and it probably played out in Q3 and probably also might come in Q4. How to project this number or how to understand this?
Ritesh, giving a projection for a number would be difficult, but this number would basically -- you won't see similar numbers every quarter. You will have some quarters you would have higher numbers, some quarters, you will have lower numbers. But as we speak, we are signing on more contracts with customers, who -- it will have -- when you look at it more from a yearly basis, you will have a constant number, which we think should be constant for the next couple of years.
Sure. That's helpful.
My second question is for Amit. I think a couple of quarters back, you had indicated a broader opportunity being at around $50 billion. And you had given a pretty nice split basically between [indiscernible], semaglutide. Is it possible for you to actually [indiscernible] the number of $50 billion? You had indicated the larger portion is more on the semaglutide. You also had indicated the pen market size. So any specifics that you have for the subsegment over here and a particular updates on auto-injectors as well?
For semaglutide, [indiscernible] is effectively the only spring driven solution that matches that the device of the innovator. Most generic that don't want to get into human factors with the potential risk of, I guess, still not being able to have a qualified device, have -- will tend to opt for Shaily device. And that's where we're seeing a significant amount of traction.
So the pipeline, the number of customers that we have already signed on and the number of customers here in discussions with, effectively tells me that somewhere between -- somewhere around 70% of the semaglutide generic share will likely be with Shaily. Again, these supplies won't start until [ '26 ] or for ROW markets and then [ '29 and '30 ] onwards for the rest of the world for the U.S. markets. So you have a fairly long gestation period, but at a very, very, very healthy business and a large opportunity.
On the auto-injector side, we're currently in the last stage of development of or tirzepatide auto-injector, which is a 3-step auto-injector. It's used for -- at the moment, it's meant for -- meant to be used with tirzepatide, which is Mounjaro or Zepbound, which is a Lilly drug, but the generic equivalent of these drugs. So you must have more or may not have, but Lilly has, of course, reported very, very healthy revenue numbers on [indiscernible]. And those will continue to grow in the future.
So we're trying to secure as many generics, including very large generics, need European American generics, to drive a healthy -- to create a healthy pipeline for tirzepatide.
And time lines on [indiscernible] systems?
You have NCE [ minus 1 ] filing deadline of May 2026, which means we will start supplies in the end of the current year -- current calendar year, and supplies will continue into calendar year '25 and '26. So the official market launch probably cannot happen until mid-2030s. So that's 2034, '35 is probably when market launch for tirzepatide will happen. But we will still supply smaller volumes year-on-year until that time. It's not that you just do a clinical data and you end supply. You continue to supply.
And just last question, would it be fair to assume that we would be working with the top 3 companies when it comes to the pen? I'm referring to Sanofi Novo, [indiscernible]?
No, we don't work with Novo and [indiscernible]. Sanofi is the only company from the top 3 that we work with.
Okay. So what I was referring to is including the pipeline that we are working on, it is still Sanofi and then the generic part of the market?
Yes. So our -- everything we do for Sanofi is contract manufacturing. Our pipeline and where we see still growth is on our own devices, which are meant to be used at the moment for generics.
Sure. This is quite useful. I'll join back the queue.
We have our next question from the line of Pritesh Chheda from Lucky Investments.
Sir, I have a few questions. First, in the stand-alone on the manufacturing side, what would be the pharma performance for the 9 months?
Pritesh, you know we don't give individual revenues, so it will be difficult for us to talk about. But to give you a sense of it, of pharma revenue between Q2 to Q3, Q3 revenues on pharma would be [indiscernible] in Q2.
For 9 months, what would be the growth? You may not quantify the revenue number, but both in pharma is possible to share?
Pritesh, we would retain from sharing the data.
No problem. My second question is when is the new pharma facility supposed to get operational? And once the whole CapEx gets operational, the total company CapEx, what is the maximum revenue potential on the CapEx?
CapEx has already been operational. We have already operationalized the plant end of Q2.
Okay. It was a part of CWIP H2 and [indiscernible].
It has gone fourth of October. So that -- for second [indiscernible] [ third ] is when we capitalize the whole thing, and it's been put to use also that the addition of machines and everything happened in Q3. So that's what has been done.
And revenue perspective, we basically look at somewhere between 2.25 to 2.5x of [indiscernible] capital investment as revenue on a full capacity basis.
Okay. My other question is, based on the supply schedules or the orders now that you have for FY '25, what kind of manufacturing growth we can look at? At least in 9 months, we are flat, so what kind of manufacturing growth we can look at, based on whatever supply schedules or orders you have?
You're talking about on an overall company level?
Yes. overall company level.
So I think at the overall company level, we would have growth next year. How will that growth comment as we have talked about new business is getting commercialized, whether on the home furnishings front, on the [indiscernible] terms of appliances, automotive, FMCG and healthcare. So these are businesses which are getting commercialized as we speak.
I was also told about the surprise for the spring [indiscernible] pen injector, which will happen during FY [ '25, ] some of it will happen during FY [ '25. ] So there will be in each of these segments, you will see growth happening. So you will see growth happening. Looking at the scenario where we are right now, we don't want to put in a percentage in terms of what sort of growth you're looking at. But I think we should see decent market growth coming next.
Okay. And my last question is on the pharma platform monetization part. So there is a number for 9 months, which is a revenue of INR 20 crores and EBITDA of 16. And you mentioned that you would continue in quarter over as well. So is it possible to share what kind of revenue and EBITDA on the pharma monetization side you will have in FY '24 at least?
I mean quarter 4 will be similar to quarter 3 in terms of the [indiscernible] innovations U.K. Very similar, I don't want to put an exact number whether we're going to have a higher number or a lower number, but it will be very, very similar to that of quarter 3.
And it will sustain in FY '25 as well as our total revenue and the EBITDA for the full year.
We see -- right now, we see good pipeline for the next 2 years at a minimum. So 2, 3 years, I don't foresee right will not be sustained, it would be sustained at a certain level.
And Pritesh, what we also do is we don't -- the whole revenue is not recognized with one shot, it gets recognized over online to [indiscernible] to 15-month period. So even today, whatever we have recognized in quarter 3, you will see some of that balance revenue under that contract being recognized over a period, the next 2, 3, 4 quarters.
We have our next question from the line of Ravi Shah from Opal Securities.
Am I audible?
Yes, sir, you are audible.
Yes. Sir, my last 2 questions, sir. First would be [indiscernible] see a strong improvement in our margins, both on gross and EBITDA level. I think I missed the early part of the call. I just want to know if what kind of steady state EBITDA margin should we be looking at going forward?
Ravi, we typically don't give out guidance on our margin profile return ratio. What we would say is that if you were to look at more from a yearly basis and not [ mobile ] quarterly basis, we see EBITDA margins and ROC is improving as we speak over the next 2 years.
Understood, sir. Sir, this is [indiscernible] majorly because of the [indiscernible] more higher medical -- higher [indiscernible] medical device?
Yes. A combination of a [indiscernible] utilization is improving across our facilities also.
Understood, sir. Sir, one more metric I would like to ask would be on the export target. So [indiscernible] it is roughly 75, 25. So are we part [indiscernible] to the split? Or are you -- I mean what kind of [indiscernible] are you going to be looking at going forward, if you can help on that?
I think as our health care business builds up, you will see domestic revenue going up, because some of our device things will be too domestic, [indiscernible], who, in turn, will be exporting it. But you will still see our business tilted towards export and [indiscernible]. You could have the 5%, 10% variation, but I don't see any substantial change over the next couple of years.
We have our next question from the line of Aman Vij from [indiscernible] Investment Managers.
First questions are on the pharma business. So if you can give an update on, I believe we would have participated in [ Pharmapack ] recently. So if you can talk about how was the response to our devices and...
We did participate at Pharmapack. A really, really packed schedule over 2 days. I'll be very honest, we did not get time to have lunch on either of those days. So reception has been very good. Again, it was supposed -- this update was meant to be for the next quarter earnings call, given that Pharmapack happened in January -- end of January. And the response has been phenomenal, it has been very good.
Sure, sir. My next question is in the presentation, we've talked about we have signed up 4 new contracts. So as of date, what is the total number of contracts we have in this division?
Aman, we plan to answer this question on the next earnings call. We're going to consolidate information on the number of contracts on each of our devices and molecules.
Okay. No worries. Next question was on the Middle East market. So in our previous calls, we have been talk -- we have talked about we are targeting that. If you can talk about a little bit in terms of size, how big is that market? And what kind of market share could we say we can get over the next few years?
I mean if you look at it from the current scenario, where we're doing an x number of times a year. The Middle East can contribute -- can have a contribution of 30% to our current -- the number of pens we do a year. But going forward, what will happen is that the Middle East markets can only consume a certain amount of volume.
So as other markets, especially the U.S. market opens up for us, you will see that 30% contribution, while the number might remain the same, we will come down in terms of percentage to probably 10% or 12% or 15%.
Sure. That's [indiscernible] Amit. Next question is you talked in the last call about some -- we have received some commercial supplies. Can you give any update on the same as we started the supply or any other commercial orders we expect in this year?
We are executing another commercial order -- a second commercial order at the moment. We will provide an update on quarter 4. So we have executed one commercial order and we are executing the second one.
Sure. Final question, just if we look at holistically on the pharma side, so we now have the CapEx ready. So in your estimates, how long do you think it will take for us to fully utilize this new pharma facility?
Fully utilized. I'd say FY '26 is when you will see of -- FY '26 is when you will see a high level of -- very high level of utilization, because that's also when we have key market launches for semaglutide, [indiscernible] and the scale-up of some of our insulin businesses.
[indiscernible]
We can't hear you.
Yes. I was saying, sir, so by FY '27, do we expect to fully utilize the plant?
Yes, I think that comment basically [indiscernible] out from here when we think we should be close to full utilization level.
Sure, sure. That helps. Next, coming on the nonpharma part of the business. You had indicated there's some kind of slowdown. So -- and we have received a lot of orders last 2, 3 quarters, most of them are supposed to get executed next year only. So do you expect this slowdown to continue for next 1, 2 quarters? Or do you think now this is the base in every quarter, basically, we can see some growth in the nonpharma part of the business as well?
So if you look at the numbers over the last 4 quarters or last 6 quarters, you would have seen that this business has been steady. It's not growing at a very positive for the same study. And I think probably -- this is probably the base at which we have done. We should be able to see growth [indiscernible], but at the same time, there are challenges in terms of macro challenges today that you have [indiscernible] problem in terms of getting -- ships are getting -- based on shipping containers and everything [indiscernible] going up. So these are some challenges which are there.
My sense, if I were to look at next year, you will basically see growth on go to part of the business, whether it's health care and the nonhealth care. I mentioned it when one of the other participants is RC are looking at growth on coming in from appliances, automotive, home furnishings as well as FMCG on the nonhealth care front and obviously on the health care front for [ FY '25. ]
Sure, sir. Yes, these are the questions for now. I'll get back in the queue.
We have our next question from the line of [ Karan Mehra ] from Meta Investments.
So wanted to understand like if you can throw some light on the toy business, I believe we are not actively pursuing the same. So just wanted to understand, like, is it not margin lucrative, or what would be the major reason for it?
We are not pursuing it. And it's not so much about margin lucrative. I think margins would be similar to the home furnishings business or any consumer business that we're into. It's -- there isn't the stickiness. We don't find that there is a stickiness from the customer side to stick with a particular supplier. I think you get a percent discount, you go elsewhere, and that's not the kind of businesses we want. We don't find it to be sustainable for our growth.
Understood. And with regards to like we have a plant in Halol exclusively for this carbon steel business. If you can throw some light on the utilization levels and like have -- how have we improved since the commencement of this business?
So, Karen, I think Amit talked about in a speed when we have added 2 new products with [indiscernible] for 2 new products there. So that will get commercialized as we speak over the next 2 quarters. We are in the development of that.
We have been able to increase volumes on our existing products. So if I look to compare FY '23 and FY '24, revenue and utilization levels have been higher than FY '23 on carbon steel for FY '24. We expect that you will see better utilization levels and revenue in FY '25 and FY '26 as we speak.
Understood. I will get back in the queue for further questions.
We have our next question from the line of Ritesh Shah from Investec.
Yes. Amit, I think, last to last quarter you had indicated that we were looking for around 25% volume metric growth when it comes to the number of plants. And based on the notes that I have, I think we did around 10 million [ pens ] last year. So for this year, are we on track to achieve that number of 20%, 25%?
Yes.
Okay. And how should we look at the same number, say, for the next fiscal?
I think next financial year, we will -- 2 things are going to happen. One is that we're going to have sales of a very high-value product. The numbers might not go up. The revenue number will certainly go up by 25%. The volume might not go up by 25% because the product is a very high-value product.
But you'd look at, I'd say, even at a bare minimum to look at probably a 15% to 20% growth on quantities in the following -- in the upcoming financial year.
Okay. And for this system, when we say 25%, is it more in the second half? Or is it more basically first half? I would presume it's more second half. Would it be like 70% in second half?
We had good growth on our contract manufacturing numbers in the first half, and we have very good growth on our -- on our own IP devices in the second half.
Okay. But if I had to look at it from a revenue standpoint, any broad indication...
Basically the second half has been good -- will be good for us. I think quarter 3 has been good, quarter 4 will be better.
Okay. But fair to assume like we would have like clocked 25% growth for FY '24? Or more [indiscernible]?
On a quarter-to-quarter basis? Or [indiscernible]?
Year-on-year basis it will be higher than that.
We'll be higher than that on a year-on-year basis.
Right. So closer to like 40%, 50% or basically like 25% to [indiscernible]?
I think you're getting into a lot of numbers there.
Okay. [indiscernible] enough. Sorry, enough. Just trying to get the hand of the business. And any update on the home furnishing side and specifically in the carbon steel, any new orders uptick in revenues?
Go ahead, [indiscernible]. That's fine.
Yes. Sorry. I was mentioning in the speed that we have [indiscernible] orders for 2 new products for -- on the [indiscernible] part of it. In quarter 1 and quarter 2, we had talked about additional business, which we have taken on the plastic side from this customer. So we have been able to get a decent new business confirmations from them, if I would look at quarter 1, quarter 2, quarter 3.
Sure. And lastly, on the management hiring, I think we were looking for [ adding ] a CEO? Is it still something that we are working on? Or is there something on the back [indiscernible]?
No. We put a temporary hold on it. It takes a lot of my personal bandwidth, and after having 2 sort of unsuccessful events, we put it on hold for now. What we're doing instead is we're hiring senior leadership across the board below the CEO level.
So is it like we have divisional help as I looked at home furnishing, the [indiscernible] of carbon steel. Is that the -- basically the management clearing has been done?
So that's kind of where we're heading. We don't have it across the board today, but we have someone that leads the business as a home furnishing business. We have put in place someone that's going to lead pharma as a business unit. But the individual will need a couple of years of [indiscernible].
So these -- they have been put in place. And I'm also personally spending time on developing a new business, which, unfortunately, we cannot say anything about. I won't say a customer, but it's a segment of the business that we're trying to develop. Again, requires very high engineering and precision capabilities.
Sure. That's helpful. And just last question, Amit, like we are quite hopeful on the pharma part of the business actually going out all that probably the next 2, 3 years. What are the key risks or variable that you actually worry upon?
I mean I think the biggest worry is that the customers you work for don't take it to market or don't end up being successful in the market. That's really the big worry. One -- I mean, a risk that is always going to remain is the risk of having any potential quality management system issues. But we have developed that over the last several years, and we're very focused on it. We don't take shortcuts and don't intend to in the future. So whatever -- whichever way, we move forward. Whether a customer is successful or not, at least the facility will always be in compliance.
Perfect. That's useful. And just one question for Sanjay. So how much of the investment which has gone on the pharma side, when we talk about incremental [indiscernible] injectors or pens, how do you basically look at the IRR for that incremental CapEx? And if you could help that number, say, over the last 9 months or say, last 2 years, that will be quite useful.
So Ritesh, over the last 1.5 years or 21 months, we would have invested about 100 [indiscernible].
[Foreign Language]
[indiscernible] somebody else's line?
I'm checking.
I'm just asking the operator to do.
Yes, just [indiscernible]. Yes, sir, please go ahead.
Hello.
Yes.
It's me.
[indiscernible]
I just want to correct the pharma asset depreciation, is it a part of the quarter 3 number?
Yes. It's part of the quarter 3 number.
We have our next question from the line of [ Ganesh ] from GK Advisors.
Am I audible?
Yes.
Okay. So I have invested in our company since 2018, nearly 4 years now. So we have been taking intermittent issues every other year or so, sold almost everything. So do you anticipate anything going around in our new businesses in the next year or so? I mean, of course, the shipping industry is a problem shipment now? Anything other than that?
[indiscernible], do you want to take that? Or?
So yes, I didn't understand the question. I apologize. Can you repeat the [indiscernible]?
Yes, I'll repeat it. So I've been interested in Shaily in 2018, nearly 6 years now. So every other year, we have been taking some problems, and we have recalled that. So in this year, apart from the problems facing the shipping, do you anticipate anything going wrong? I know you partly answered it from a phrama standpoint to the previous caller, but anything else from an operational side, from the [indiscernible]side, do you anticipate anything going wrong and how you feel you're confident that [indiscernible]?
I mean look, operationally, we're quite strong at the moment. And we have built that strength over several years, probably since you have invested. Since 2018, that capability has been pushed up quite a bit.
From a business perspective, look, we're a B2B business. So our future relies solely on what our customers are able to sell. And that risk is not likely to go away.
You see the current scenario last 2 years, in fact, right? That our largest customer hasn't haven't grown -- hasn't grown [indiscernible] which had a degrowth, which means we've not had any significant growth.
So this risk will remain. And I'm not sure if there's much that we can do about it, apart from trying to grow other businesses, which we are trying and putting our efforts into do. But operationally, we're quite strong. We have the right resources at every level. I know that we were to hire a CEO, but to be honest, with or without, operationally, we're still strong.
Got it. So over the next 3 years or so, how do you see pharma growing with respect to the whole company? Is it qualitative or quantitative?
Will we see pharma being about 25% of revenue over the next 3 years. And over the next maybe 6 or 7 years, we're putting in our efforts so that pharma essentially becomes at least somewhere between 35% and 50% of our overall business.
Got it. So the current pharma capacity that we have, I know there is a big differential between value-added business, our own IPs and all that. But can you put like a bookended numbers, what is the kind of an average revenue potential current capacity? The reason I'm asking is will we need more capacity [indiscernible] 3 years down the line or even earlier?
Difficult to answer, Ganesh.
Okay. [indiscernible]
[indiscernible] 2.25 to 2.5 as we look at an overall basis. Pharma is CapEx heavy, it's not light. But as we increase the revenue from our own devices, eventually, you will get to that number of 2.5.
Got it. So the toy business capacity, I mean, I know in spite of our efforts, it has been [indiscernible] point for us. Is that a fungible, with aspect to the [indiscernible] business that we have, and how fungible is it?
It is fungible. We are already working with some of the customers to use that facility.
Got it. And any major capacity that we foresee in the next year or so? Next [ 5 ] to [ 10 ] months?
It depends if we come across an opportunity that, that is -- yes. But I think to answer, maybe a different question where our efforts are on utilizing existing capacity, which means that going after businesses where the existing capacities can be utilized with the existing customers. If we onboard a new customer or a new business [indiscernible], then we will do the valuation at that point.
Got it. Got it.
We have our next question from the line of Ritesh Shah from Investec.
[indiscernible] I was waiting for the answer on the quantum of investments which you have done on the pharma side [indiscernible] say, 18, 24 months? And how do you see the payback for here?
Ritesh, what we have invested over the last 18 to [ 21 ] will basically about [ INR 125 crores ] in the pharma part of the business.
You will see revenues going up and we're being paid for in the next couple of years when we see the ramp-up of revenue [indiscernible].
We want to put in a number here in terms of an IRR or something because that's difficult for me as well. We should be able to calculate that.
You have to put in the other around, if you are deploying capital for a particular [indiscernible] or a particular spend, what is the probability for us to actually get a [indiscernible]? Is it like upwards of 50% when we do that? I'm just trying to understand the incremental optionality.
In a lot of these cases, when we put up the CapEx, we would have already signed the customer on hold. So it would basically be co-terminate with the signing agreements with the customers, in majority of the cases.
So while we would have developed the IPO, acquired the IP, a lot of development would be done once we have a contract with at least one customer in the majority of the cases.
So technically, when we do that, will there be some volume guarantee, something of that sort which takes care of the upfront investment that we are doing for that particular customer?
Ritesh, again, different customers will have different types of contracts. With some, we might have a volume [indiscernible] a lot of customers. We will not have a [indiscernible]. But the customer also pays us platform access fee, which basically covers for part of the development costs which we do.
Okay. And this is helpful.
We have a next question from the line of [indiscernible] from [indiscernible].
[indiscernible]
[indiscernible]
Now, am I audible? Clear?
Yes. Sir, you are audible but there is a lot of disturbance at your end.
Now it's clear?
Better.
So what would be the working capital in the pharma business? Working capital cycle.
The working capital cycle on an average for the total company is about 90 days. Some businesses might be at lower, some businesses might be at higher, probably plus or minus 15 [indiscernible] days to most of our [indiscernible].
Okay. And sir, in [indiscernible], the carbon steel business, the margins we have been like in launches in earlier years, so what would be the margins [indiscernible] as your mid-single digit now? In carbon steel business for 9 months?
As I said, we are improving on the top line and similar we're looking, making improvements on the bottom line between FY '22 and FY '24, and we hope to continue that.
Okay. That's it from my side.
We have our next question from the line of [ Prachi Shah ] from ABC Ventures.
Hello. Yes, sir. So I have [indiscernible] provide an overall...
Ms. [indiscernible], we are unable to hear you. Your voice is breaking.
Am I audible right now?
Yes.
So sir, I have 2 questions. First is, can you please provide an overall growth guidance for FY '25 and '26? And which are the most 2 segments which we intend to focus on?
[ Firstly ], we do not give growth guidance. So it will not be right for us to talk about it. Segments where we expect growth to come in -- we have talked about one in health care, and we want to talk about appliances, automotive, furnishings and FMCG is the segments where we will see growth coming forward for the next 2 years.
Okay. Okay. So my second question is how much CapEx has been done so far in FY '24 and for which segment? And what our CapEx plans for future?
CapEx, which we have done in FY '24 is mainly on the pharma front and the total CapEx, which we would have done in the current year will be above INR 100 crores. We will end up the year with close to INR 200 crores of CapEx, which we will do in the current year.
And I'll also mention that what we're looking at is improving our utilization level to our existing facilities. So our focus is going to be on that. [indiscernible] looking at making any large investments in FY '25 and FY '26. [indiscernible] is some specific business where we will need to make that. That's something which we cannot avail of [indiscernible].
We have our next question from the line of Manish Gupta from [indiscernible].
My question is that the CapEx that we did for toys, is that -- can that be used in the health care business? Or can that be used only in the furniture business that we have?
Manish, it cannot be used in the health care business. It can be used in any of our other businesses, including FMCG, home furnishings, automotive, financial appliances, but it cannot be used in health care.
Okay. And by when do you think that capacity that you had put up for toys can be deployed in these segments that you talked about?
So Manish, part of that capacity, we recently just started doing it for some of our new business on appliances and everything. We are working on other businesses as we speak. Should have better clarity in the next couple of quarters as we speak. So where we would be able to give much better clarity.
Okay. And my third question and the last question I had was that I think the big opportunity that Amit mentioned was semaglutide and some patterns of that are expiring, I think in [ '26 ] and some patents are expiring in [ '29 ]. And I think you have also mentioned that a very large portion of the generic [indiscernible] going after this opportunity are using your delivery systems.
So I just wanted to get a sense that if, let's say, you're doing 100 units of trial batches today, for the generic [indiscernible] who are filing for some of your trial batches. As we get to, say, 2030, assuming you have just 25% of the overall market for semaglutide then, what does this #10 ramp up to in just a broad estimate if you have that?
The card semaglutide market was somewhere around 150 million to 200 million [indiscernible] a year. With the generic entry, you -- and even without it, from between now and 2030, every analyst, including pharma companies themselves are projecting growth on that business. So if you look at somewhere between 2 billion to 5 billion doses a year, you're looking at an opportunity size of 0.5 million [indiscernible] a year. And if -- I mean, if we are fortunate enough to get 25% of that, it's a very substantial number.
Okay.
But I don't know, Manish, if we'll get 25% of that. So please -- that was just the market size projections.
As there are no further questions, I would now like to hand the conference over to management for closing comments.
Thank you, everyone, for joining the call. We hope that we've been able to answer your questions adequately. For any further information, I request you to get in touch with SGA, our Investor Relations advisers. Thank you, and have a great evening.
Okay. On behalf of Shaily Engineering Products Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.