Blue Jet Healthcare Gets A 'Buy' As ICICI Securities Initiates Coverages Citing New Product Rampup

ICICI Securities Report

We initiate coverage on BlueJet Healthcare Ltd. with Buy rating and target price of Rs 450, valuing the company at 26 times FY26E price/earning multiple.

This implies 18.1 times FY26E enterprise value/Ebitda and 6.4 times price/book value at FY26E. The free cash flow yield at the target price is 2.1%. We expect BlueJet’s revenue/Ebitda/net profit to grow at a healthy compound annual growth rate of 20.4%/24%/23.4%, respectively.

This is significant acceleration after stable revenues seen for the past three years, wherein the company had no new product launches. We expect BlueJet’s revenue to grow on the back of three-five products addition, which could drive significant revenue growth, and also help diversify its business model, making it more resilient.

Downside risks

• High concentration of one key product and one key customer. Any unfavourable development can materially harm prospects for BlueJet.

• Two out of three new products of BlueJet have exposure to new chemical entity where market development for these products is critical for sale of intermediates for BlueJet.

• The company has significant exposure to innovators, and any unfavourable incidents (like two accidents in past one year) may hurt its business.

• Promoter has exposure to realty sector which is cyclical. Any indirect impact on private business of realty can be a valuation de-rating event.

Upside risks

• Higher-than-expected penetration of two NCE molecules where BlueJet has supply agreements.

• BlueJet has a strong new product pipeline. We have assumed nil new launches in our estimates.

• Any large long-term contrast win.

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