Synopsis: Shaily Engineering Plastics crashed 17 percent in a single session after news involving its major client Dr Reddy’s Laboratories rattled investors. What triggered this steep fall in the stock?
Shares of Shaily Engineering Plastics plunged sharply after investors reacted to news of a regulatory setback involving one of its key clients in the pharmaceutical sector. The stock witnessed heavy selling as concerns mounted over a potential delay in a major drug launch that was expected to drive strong business growth for the company’s healthcare division.
Shaily Engineering Plastics Ltd, saw its stock tumble 17.12 percent to an intraday low of Rs. 2,116.30 on Thursday from the previous close of Rs. 2,553.70. The company has a market capitalisation of Rs. 10,555.88 crore. It has delivered multibagger returns of 133 percent in a year. Ace investor Ashish Kacholia owns a 3.22 percent stake in the company.
What’s the News?
Dr Reddy’s Laboratories announced that it had received a Notice of Non-Compliance from Canada’s Pharmaceutical Drugs Directorate concerning its Abbreviated New Drug Submission (ANDS) for Semaglutide Injection.
The regulator has sought additional data and clarifications on certain aspects of the filing, leading to concerns about a delay in the drug’s approval timeline in Canada. The drug in question is the generic version of Novo Nordisk’s blockbuster brands Ozempic and Wegovy, which are widely prescribed for managing type-2 diabetes and obesity.
What is Semaglutide?
Semaglutide is a medication used to help adults with type 2 diabetes control their blood sugar levels. It mimics a natural hormone called GLP-1, which triggers insulin release, lowers glucose production by the liver, and slows digestion, thereby helping maintain steady blood sugar levels. Apart from diabetes, semaglutide has also gained popularity for aiding in weight management due to its appetite-suppressing effects.
What is the Relation Between Shaily Engineering Plastics and Dr Reddy’s Setback?
The regulatory setback for Dr Reddy’s has direct implications for Shaily Engineering, which supplies the plastic components used in the pre-filled injection pens for semaglutide. These injection devices are essential for administering the drug, and any delay in the product’s market launch can affect Shaily’s order flow and revenue projections from this segment.
According to Shaily Engineering’s FY25 annual report, Dr Reddy’s is listed among its key pharmaceutical clients. The company had previously indicated that the healthcare division’s share of total revenue had doubled to 31 percent in the first quarter of FY26, largely driven by growing demand for such injection devices. To meet this demand, Shaily installed 19 new injection moulding machines and a new assembly and printing line, expanding its capacity by 25 million pens annually.
The company also outlined plans to set up another line with a capacity of 25 million pens for a different semaglutide variant. The total planned capital expenditure for FY26 stands at Rs. 125 crore, with the expansion expected to be completed between the end of this year and early next year.
Future Outlook
Brokerage analysts from JP Morgan and Emkay Global have noted that this regulatory non-compliance notice will likely delay Dr Reddy’s semaglutide launch in Canada beyond the original target of January 2026. Such a delay could erode Dr Reddy’s first-mover advantage in the region, indirectly impacting Shaily Engineering’s growth momentum tied to the drug’s rollout.
About the Company
Shaily Engineering Plastics Ltd is engaged in the manufacture and sale of precision injection-moulded plastic components and products in India. The company’s portfolio includes specialty and platform devices, inhalers, sprays, pumps, insulin injector pens, auto-injectors, and customized packaging solutions for both solid and liquid pharmaceutical formulations.
It also provides contract development and manufacturing services to major global pharmaceutical players. Beyond healthcare, Shaily produces kitchenware, storage and cleaning products, and steel furniture such as cabinets, tables, and drawer units. The company further supplies precision plastic components for lighting, home appliances, automotive, and personal care applications, including razors, sprays, and packaging products.
-Manan Gangwar
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