Blue Jet Healthcare jumps 6% as MOFSL initiates coverage, 26% upside seen

Blue Jet Healthcare share price today: Shares of pharma company Blue Jet Healthcare surged around 6.5 per cent on Wednesday to hit an intraday high of ₹730.10 on the NSE after Motilal Oswal Financial Services (MOFSL) initiated its coverage with a 'Buy' rating. The brokerage firm has set a target price of ₹865, which shows an upside of 26 per cent from its last closing price of ₹685.40. 

 

According to analysts at MOFSL, the company has established itself as a reliable supplier of Contrast Media and Pharmaceutical Intermediaries & API to its customers for the past three decades. It is now significantly increasing its investment in research and development (R&D) to move up the value chain. 

 

At 2:38 PM on Wednesday, Blue Jet Healthcare’s stock was quoting at ₹715, up 4.32 per cent on the National Stock Exchange (NSE). In comparison, the benchmark Nifty50 index was trading at 24,330.95, down 5 points or 0.02 per cent. On a year-to-date basis, the stock has surged around 21 per cent compared to a 2.9 per cent increase in the Nifty50 index. The pharma company's total market capitalisation stood at ₹12,381.96 crore.  Follow Stock Market Latest Updates LIVE

 

Despite subdued performance from FY20 to FY24 due to a lack of new launches, the company is poised for a sharp turnaround on the back of product ramp-ups and new launches. The company's revenue, Ebitda (earnings before interest, tax, depreciation and amortisation), and profit are likely to grow at a CAGR (compound annual growth rate) of 27 per cent, 24 per cent and 19 per cent, respectively, over FY25-27E. It expects an average Ebitda margin of 35.1 per cent during the same period.

 

During FY25-27E, the brokerage expects Blue Jet to record free cash flow (FCF) of ₹360 crore and cumulative capex (capital expenditure) of ₹500 billion. 

 

"Blue Jet Healthcare's revenue growth will be driven by new products in iodinated and gadolinium contrast media, NCE 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 brokerage said.

 

Recently, the company commissioned Plant 6 at unit 2 in Ambernath with an investment of ₹90 crore, adding 120 KL capacity for PI and contrast media. In addition, it started cardiovascular PI production in mid-September 2024, increased R&D into advanced platforms and bolstered talent for CDMO growth.   ALSO READ | Varun Beverages posts 33% rise in Q1CY25 PAT, announces dividend; details

 

However, MOFSL also flagged some downside risks for the company including high product and customer concentration, delays in new product ramp-up, and lower margins. "Upside risks include a faster ramp-up of high-margin products and increased long-term contracts that could boost growth and valuations," the brokerage said.

About Blue Jet Healthcare

Incorporated in 1968, Blue Jet Healthcare is a pharmaceutical and healthcare ingredient company that operates as a Contract Development and Manufacturing Organisation (CDMO). It primarily focuses on contrast media intermediates, high-intensity sweeteners, pharmaceutical intermediates and APIs. It has a presence in over 50 countries across the United States, Europe and Asia.