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Blue Jet Healthcare Ltd (BJHL), established in December 1968, is a specialty pharmaceutical and healthcare ingredients and intermediates firm that focuses on unique products tailored for innovator pharmaceutical and multinational generic pharmaceutical companies. They develop and supply specialty pharmaceutical and healthcare ingredients and intermediates under a contract development and manufacturing organization (CDMO) business model. Over the last 3 years, BJHL has issued invoices to more than 400 customers in 39 different countries. Furthermore, the company operates three manufacturing facilities located in Maharashtra.

• The global contrast media formulations market is at ~US $5.9bn(~Rs.442.5bn) and is expected to grow at a CAGR of 6-8% over CY23-25 led by rising healthcare expenditure, demand for preventive healthcare and rise in lifestyle diseases etc.

• The global high-intensity sweetener market is at ~US$2.9 to US$3.0 bn (~?232– ?240 bn) in size in FY23 and is expected to grow at a CAGR of ~ 6% to 7% over the next 5 years.

• BJHL’s, core business encompasses three key product categories i.e., contrast media intermediates (~71% of sales in FY23), high-intensity sweeteners (~25% of sales in FY23), and pharmaceutical intermediates and active pharmaceutical ingredients (~5% of sales in FY23).

• BJHL accounted for more than 75% of the total export value of a specific contrast media intermediate from India between CY20-CY22.

• Revenue from operations grew at a CAGR of ~21% over FY21–23, led by increase in export sales volume of key business segments.

• Revenue and PAT rebounded in Q1FY24, led by increased sales volume and decrease in raw material prices and normalisation of receivables.

• The EBITDA margins were healthy at ~ 36% (3-year Avg.), and the return ratios such as 3-year Avg. RoE and RoCE were at 33% and 46%, respectively, over FY21– 23.

• FY23 capacity utilisation was at ~71%, going ahead, backed by green field expansion, the aggregate annual production capacity is anticipated to increase by 48% to 1,513.6 KL by over FY23-FY25E.

• At the upper price band of Rs.346, BJHL is available at a P/E of 34x (FY24E annualised EPS), which appears to be fully priced. Considering its strong business prospects, healthy return ratios, forward integration, greenfield expansion plans and promising industry outlook, we assign a “Subscribe” rating on a medium- to long-term basis.

Purpose of IPO

The IPO consists of only OFS (Offer for Sale) of Rs. 840cr. The issue consists of only offer for sale (OFS) wherein the selling shareholders will divest up to 2.43cr equity shares. Although the company will not receive any proceeds from this offer, yet the prime purpose of the issue is to achieve the benefits of listing shares on stock exchanges.

Key Risks

• Significant portion of revenue (~78% in Q1FY24) is derived from European markets.

• Customer Concentration risk -~73% of total revenue from operations in Q1FY24 is derived from top 5 customers.

• Dependent on limited number of raw material suppliers (~54% of raw material is sourced from outside India in Q1FY24). However, company intends to produce contrast media intermediate (Key starting materials) inhouse starting from the FY24, thereby eliminating dependencies on imports.

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SEBI Registration Number: INH200000345