Blue Jet Healthcare IPO opens today: Here's what brokerage firms say about the issue

The initial public offering (IPO) on Blue Jet Healthcare kicks-off for subscription on Wednesday, October 25. The pharma company is selling its shares in the range of Rs 329-346 apiece with a lot size of 43 equity shares and its multiples thereafter. The issue can be subscribed till Friday, October 27.

Incorporated in 1968, Blue Jet Healthcare is a pharma and healthcare ingredient player, which is also an intermediate company. It initially was a saccharin and (artificial sweeteners) its salts maker in India but later expanded into contrast media intermediates, which are used in CT scans and MRIs.

The IPO of Blue Jet Healthcare is entirely an offer-for-sale (OFS) of up 24,285,160 equity shares by its promoters Akshay Bansarilal Arora and Shiven Akshay Arora to raise up to Rs 840.27 crore. The company will not receive any proceeds from the IPO and the entire sum will go to the selling shareholders.

Blue Jet Healthcare raised Rs 252.08 crore from 22 anchor investors on Monday by allocation of 72,85,548 shares at a price of Rs 346 apiece. Investors including Government Pension Fund Global, ICICI Prudential, HDFC, Nippon Life, Bandhan, Aditya Birla Sun Life, HSBC Global, Edelweiss Trusteeship, Troo Capital, Societe Generale, M3 Investment participated in the anchor book.

Blue Jet Healthcare is a global pharmaceutical company, which mainly deals in three product categories, including contrast media intermediates; high-intensity sweeteners; and pharma intermediates and active pharmaceutical ingredients. Europe contributed to about three-fourth revenue of the company.

Blue Jet Healthcare has reserved not more than 50 per cent of shares for the qualified institutional bidders (QIB), while it has reserved 15 per cent of shares for non-institutional investors (NIIs). Remaining 35 per cent of shares shall go to retail investors of the issue.

ICICI Securities, Kotak Mahindra Capital Company and JP Morgan India are the book running lead managers for the IPO while Link Intime India is the registrar for the issue. Shares of the company will be listed on both BSE and NSE. Here's what a host of brokerage firms say about the IPO of Blue Jet Healthcare

Reliance Securities
Rating: Subscribe
Blue Jet Healthcare is one of the innovative companies in niche categories with more than two decades of experience and has specialized chemistry capabilities; with dedicated R&D laboratories to offer various products in highly concentrated contrast media formulations, said Reliance Securities with a 'subscribe' rating.

"The management is adopting a prudent strategy of diversifying revenues with a major thrust on exports with a high margin product mix going forward. The increased expansion over the next 2 years for envisaged increase in demand and leveraging the customer relationships for pharma intermediates and API categories will boost earnings over the next few years," it added.

StoxBox
Rating: Subscribe
Blue Jet Healthcare has established a contract development and manufacturing organization (CDMO) business model with specialized chemistry capabilities in contrast to media intermediates and high-intensity sweeteners. The growth in the CDMO model, robust financial performance and expanding production capacity are expected to drive its performance, said StoxBox.

"The company has a track record of sustained revenue and PAT growth. On the upper price band, the issue is valued at a P/E of 37.5 times based on FY2023 earnings which we feel is fairly valued. We, therefore, recommend an subscribe rating for the issue," it added.

Choice Broking
Rating: Subscribe
The company is deriving around 75 per cent of the business from CDMO operations. Its product profile is niche and over the period of operations, it has developed a long-lasting relation with the clients. As a result, today it is able to generate around 70 per cent of the total business from long-term contracts with such clients, said Choice Broking.

"It has reported a strong growth in the business, however higher raw material costs impacted the profitability. RoE was healthy, despite 3 times rise in net-worth. Going forward, BJHL will benefit from sustained demand for its products and lower raw material prices. There are no comparable peers having product and business operations," it added with a subscribe rating.

IndSec Securities
Rating: Subscribe
At the upper price band, the IPO is priced at 37.5 times FY23 EPS. Blue Jet Healthcare has 9 per cent of global contrast media intermediates capacity share, it should see traction owing to increasing penetration of contrast media versus the traditional scan report. The contrast media provides a clear picture of the scan and helps better diagnosis of the illness, said IndSec Securities.

"Blue Jet is one of the leading manufacturers and suppliers of high-intensity sweeteners and has several marquee clients under its ambit. Europe contributes 74 per cent to its revenue followed by India and the USA. Its Revenue, EBITDA and APAT have grown sharply over FY21-23. The company has a robust RoCE and RoE coupled with debt-free balance sheet," it added with a subscribe rating.

Sushil Finance
Rating: Subscribe
The company has long-term and stable relationships with multinational customers, including industry leaders in contrast media and tabletop sweeteners. The company collaborates and enters into annual and multi-year supply contracts thus providing strong visibility and predictability of order book revenue, said Sushil Finance.

"With plans to enhance operational efficiency and expand production capacity, the company aims to meet rising customer demand with no listed peers. Looking at all the factors, risks and opportunities the investors may apply for the issue with a medium to long-term view," it added.

Aditya Gaggar, Director of Progressive Shares said, "Blue Jet Healthcare posted total income/net profit of Rs 5078.1 mn/ Rs 1357.9 mn (FY21), Rs 7028.8 mn/ Rs 1815.9 mn (FY22), Rs 7449.4 mn/Rs 1600.3 mn (FY23. For Q1FY24, it earned a net profit of Rs 441.2 mn on a total income of Rs 1846.0 mn. If we attribute annualized earnings for FY24 to the post-IPO equity capital, then the asking price is at a P/E of 34.02x. It is purely an offer for sale. Blue Jet Healthcare Limited has created a niche place in the global markets for the products manufactured by it and enjoys long-term relationships with marquee customers and FMCGs. However, considering the headwinds that the speciality chemicals industry is currently facing, one can look at the IPO from a long-term perspective if one wants to invest purposes in a niche business or may be considering investing post listing for better visibility. " 

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