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Encouraging 2HFY25; gears up for the next leg of growth

* Blue Jet Healthcare (BLUEJET)’s 4QFY25 revenue jumped 85% YoY to INR3.4b, primarily driven by higher sales in Pharma Intermediates (PI). Gross margin expanded 170bp YoY to 54.9%, while EBITDAM stood at 41.1% (up 12.3pp YoY). PAT came in at INR1.1b vs. our estimate of INR1.1b.

* In FY25, the company delivered a sharp improvement in operational and financial metrics, fueled by new capacity additions, better operating leverage, and tight cost control. EBITDA expanded notably, with 75% average capacity utilization for BLUEJET reflecting strong demand and efficient execution.

* Pharma intermediates and APIs saw healthy offtake, especially in CVS intermediates, with firm visibility into FY26. The contrast media segment recovered in 2HFY25, with commercial production now underway and new launches expected in FY26. The high-intensity sweeteners remained stable despite global headwinds.

* Key investments in FY25 included 157KL of new capacity, a commercialized contrast media block, and an INR400m R&D center focused on GLP-1s and advanced chemistries. Mahad Unit-3 remains on track for 2HFY26E, and a fresh INR3b capex was incurred in FY25. With optimized freight and power costs and an INR15b fundraise underway, BLUEJET is well placed for sustained growth.

* Given the strong commentary, we raise our EBITDA/PAT estimates by 8%/7% for FY26 and by 12%/11% for FY27. We expect a revenue/EBITDA/PAT CAGR of 27%/30%/25% during FY25-27. The stock is trading at a P/E of ~28x on FY27E EPS of INR27.6 and FY27E EV/EBITDA of ~21x. We reiterate our BUY rating on BLUEJET with a TP of INR965.

Earnings in line; margins expand YoY

* BLUEJET’s revenue stood at INR3.4b (+85% YoY). EBITDA was INR1.4b (est. of INR1.4b, +164% YoY), and EBITDAM came in at 41.1% (+12.3pp YoY).

* The company’s PAT was INR1.1b (est. of INR1.1b, +178% YoY). BLUEJET changed its method of depreciation from the Written Down Value (WDV) to the Straight-Line Method (SLM), and therefore, depreciation expenses were reduced and PBT increased ~INR36m in 4QFY25.

* For FY25, revenue stood at INR10.3b (+45% YoY), EBITDA was at INR3.8b (+64%), and Adj. PAT stood at INR3b (+78% YoY). EBITDAM for FY25 was at 36.6% (+440bp YoY). The BoD has declared a final dividend of INR1.2/ equity share (FV of INR2/ share) for FY25.

* The BoD has proposed a fundraising of INR15b in the form of Qualified Institutions Placements (QIP), Preferential Issue or Private Placement.

* The BoD has also approved the appointment of Payal Gandhi, Chief Business Strategy Officer, as Senior Management Personnel of BLUEJET. She has been associated with the company since CY17.

* BLUEJET also acquired a land parcel in Gujarat Industrial Development Corporation (GIDC). It is situated in Dahej III, Industrial Estate, Gujarat. The consideration paid was to the tune of ~INR110m. The land parcel is ~7.5 acres.

Valuation and view

* BLUEJET’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 further ramp-up in supplies for Esperion’s bempedoic acid in FY26. We expect a CAGR of 27%/30%/25% in revenue/EBITDA/PAT during FY25-27E, with an expected average EBITDAM of 38% during FY26-27E. We expect an average RoE/RoCE of ~29%/25% during FY26-27, with an average fixed asset turnover of 3x.

* The stock is trading at a P/E of ~28x on FY27E EPS of INR27.6 and FY27E EV/EBITDA of ~21x. We reiterate our BUY rating with a TP of INR965, valuing the company at a P/E of 35x on FY27E EPS of INR27.6. Downside risks include 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 of the company.

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