The price target ascribed by Motilal, implies a potential upside of nearly 26% from Tuesday’s closing levels.
The brokerage wrote in its note that Blue Jet Healthcare is on the path to building a legacy business in line with this philosophy. With its niche offerings in contrast media and pharmaceutical intermediaries and APIs, Blue Jet has been changing the way the healthcare industry caters to the therapeutic needs of patients globally.
The company has established itself as a reliable supplier to its customers for the past three decades and is now working toward moving up the value chain by significantly increasing its investment in R&D (research and development).
Despite muted growth during FY20–24 due to a lack of new launches, Blue Jet is poised for a sharp turnaround. Driven by product ramp-ups and new launches, revenue, EBITDA, and profit are expected to grow at a CAGR of 27%, 24%, and 19%, respectively, over FY25–27E.
The brokerage expects an average EBITDA margin of 35.1%, with expected free cash flow (FCF) of ₹360 crore and capital expenditure (capex) of ₹500 crore during the same period.
At 28 times its estimated FY27 earnings, Blue Jet’s valuations remain attractive, the brokerage said.
Downside risks, as per the brokerage, include high product and customer concentration, delays in new product ramp-up, and lower margin. Upside risks include a faster ramp-up of high-margin products and increased long-term contracts that could boost growth and valuations.
Blue Jet Healthcare will also see its 3.5 crore shares or 20% of the company’s outstanding equity becomes eligible to be traded as the company’s shareholder lock-in ends on May 2.
Blue Jet Healthcare shares are currently trading 5.54% higher on Wednesday at ₹723.40.
