Buy Blue Jet Healthcare; target of Rs 600: ICICI Securities

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ICICI Securitie's research report on Blue Jet Healthcare

BlueJet’s contrast media segment revenue dipped 50% YoY / 42.3% QoQ to INR 645mn, impacted by an increase in number of days to reach consignments to customers in Europe from 40-45days to 65-70days. Its flow revenue recognition of deliver-at-site therefore company was not able to recognise higher revenue for increased production quantities. Its revenue booking should accelerate from Q2FY25, and sustain at those levels for largest customers till Dec’24. BlueJet expects quantities to start growing again from CY25; underlying revenue growth for customer in the segment was strong at 14% YoY, and it has also expanded the capacities. It has made significant progress in MRI contrast media, and forward integration for iodine-based contrast media by successfully completing validations. It is awaiting purchase order for final shipments. BlueJet expects new capacity of 70-80KL will be commissioned by Q3FY25 which will support growth for MRI-based contract media.

Outlook

Blue Jet Healthcare’s (BlueJet) Q1FY25 print was marred by logistic delays which restricted revenue recognition despite sharp jump in production by almost 40-50%. Despite inferior revenue mix, company was able to improve gross profit margin due to softening raw material prices, and benefit from additional sale in one profitable molecule. It has rampedup capacities to support growth from three products, and sales from largest product will stabilise from Q2FY25. BlueJet is guiding to grow revenue sharply with good new product pipeline, and expects to hold margin steady over the next two years. We retain our estimates, which are conservative vs company’s outlook. However, our TP has been raised to INR 600 (earlier INR 445) as we increase FY26E PE multiple to 35x (from 26x). Maintain BUY.

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