Shaily Engineering shares tumble 10% amid delay in key client's product approval

Shares of Shaily Engineering Plastics Ltd fell sharply on Thursday following news of a delay in regulatory approval for Dr Reddy's Laboratories Ltd's Semaglutide injection in the Canadian market. The stock declined 17.13 per cent during the session to hit an intraday low of Rs 2,116.30, before recovering some lost ground to close 10.05 per cent lower at Rs 2297 on BSE.

The decline came after Dr Reddy's Laboratories informed the exchanges about a delay in approval for its Semaglutide injection, a key diabetes treatment. Dr Reddy's shares also came under pressure, falling 5.67 per cent intraday before closing 4.03 per cent down at Rs 1,202.15.

According to Shaily Engineering's FY25 annual report, Dr Reddy's is among the company's top clients in the pharmaceutical segment. The company supplies critical components for injectable devices, including Semaglutide pens. This linkage has made Shaily's stock sensitive to developments related to Dr Reddy's product pipeline.

In its Q1 FY26 earnings call, Shaily Engineering's management had highlighted the rapid growth of its healthcare division. The segment's contribution to total revenue has doubled to 31 per cent, driven largely by rising demand from pharmaceutical clients. To meet this demand, the company recently installed 19 new injection moulding machines, along with an assembly and printing line capable of producing 25 million injection pens annually.

The company had also announced plans to add another 25 million-pen capacity for a variant of the Semaglutide pen, with a total capital expenditure of Rs 125 crore earmarked for FY26. The expansion is expected to be completed between end-2025 and early-2026.

During the previous earnings call, Managing Director Amit Sanghvi stated, "We have 60 per cent of the generic market share on Semaglutide across the markets that are opening up," underscoring the importance of this product line to Shaily's growth strategy.

Shaily Engineering manufactures a range of value-added plastic components and performs secondary operations such as pad printing, hot stamping, painting, screen printing, ultrasonic welding, laser marking, PVD coating and vacuum metallising.