Blue Jet Healthcare Gets 'Buy' As Motilal Oswal Initiates Coverage, Sees 26% Upside

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Motilal Oswal Report

Blue Jet Healthcare Ltd.’S revenue growth will be driven by new products in iodinated and gadolinium contrast media, new chemical entity intermediates, and a high-intensity sweetener variant. The PI/API segment is also set for strong growth, with ramp up in supplies for Esperion’s Bempedoic acid in coming quarters.

The company also recently commissioned Plant 6 at Unit 2 (Ambernath) with an investment of Rs 900 million, adding 120KL capacity for PI and contrast media. It also started a cardiovascular PI production in mid-Sep’24, expanded R&D into advanced platforms, and bolstered talent for CDMO growth.

We expect a CAGR of 27%/24%/19% in revenue/Ebitda/PAT during FY25-27E, with an expected average Ebitdam of 35.1% during FY25-27E. We expect average RoE/RoCE of ~28%/26% during FY25-27E with an average fixed asset turnover of 3.1x.

We expect free cash flow generation of Rs 3.6 billion during FY25-27E with cumulative capex of Rs 5 billion. The stock is trading at a P/E of ~28x on FY27E EPS of Rs 24.7 and FY27E EV/Ebitda of ~20x. We initiate coverage on Blue Jet Healthcare with a Buy rating and a target price of Rs 865, valuing the company at a P/E of 35x on FY27E EPS of Rs 24.7.

Downside risks include high product and customer concentration, delays in new product ramp-up, and lower margin.

Upside risks include a faster ramp-up of high-margin products and increased long-term contracts that could boost growth and valuations.

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