Blue Jet Healthcare IPO: Blue Jet Healthcare IPO opened for public subscription today and will close on Friday, October 27, 2023. The price band for its public issue at Rs 329-346 per equity share of face value Rs 2 each. At the upper end of the price band, the company’s promoters and shareholders seek to raise Rs 840.27 crore from the IPO. Ahead of the public issue, Blue Jet Healthcare shares’ GMP rose to 18.21%. The bidding for anchor investors concluded on Monday, wherein the company collected Rs 252.08 crore.
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The IPO comprises an offer-for-sale (OFS), with promoters offloading 24,285,160 shares of Rs 2 aggregating up to Rs 840.27 crore. For potential investors, the bidding starts at a minimum of 43 equity shares, with subsequent bids in multiple lots of 43 equity shares each. The minimum amount of investment required by retail investors is Rs 14,878. The company will not receive any proceeds from the Offer and all the Offer Proceeds will be received by the Selling Shareholders, in proportion to the Offered Shares sold by the respective Selling Shareholders as part of the Offer, according to the information available on Chittorgarh.com.
Blue Jet is a specialty pharmaceutical and healthcare ingredients and intermediates company, offering niche products targeted towards innovator pharmaceutical companies and multi-national generic pharmaceutical companies. The company has established a contract development and manufacturing organization (CDMO) business model with specialized chemistry capabilities in contrast media intermediates and high-intensity sweeteners on the back of strategic and early
investments in R&D and manufacturing infrastructure. The company manufactures a range of products in-house, including the key starting intermediate and advanced intermediates, allowing it to control production processes for consistent quality and cost-effectiveness.
Should you apply for the Blue Jet Healthcare IPO?
Choice Broking: Subscribe
“Over FY20-23, the company has reported a strong growth in the business, however higher raw material costs impacted the profitability. RoE was healthy, despite 3x rise in net-worth. Going forward, BJHL will benefit from sustained demand of its products and lower/stabilizing raw material prices. It has planned certain brownfield and greenfield expansions, which will increase the installed capacity by around 50% over FY25E. There are no comparable peer having product and business operations similar to BJHL. The above peers are considered only to benchmark the demanded valuation. At higher price band, BJHL is demanding a TTM P/E multiple of 34x (to its TTM EPS of Rs 10.2), which is at discount to the adjusted peer average. Thus considering the above observations, we assign a ‘Subscribe’ rating for the issue.”
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“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.”
Mehta Equities: Subscribe
“Blue Jet’s established relationships and multi-year contracts with multinational clients not only secure long-term supply agreements but also handle warehousing and logistics. Although Blue Jet showed substantial growth in FY 2022, growth in FY 2023 was subdued, with a 37% revenue and 34% profit growth in 2022, compared to 5.49% and -12% in 2023. The issue, priced at the upper band of Rs 346, with a P/E of 34x on a consolidated basis, appears to be fully priced considering the growth. However, Blue Jet’s unique niche product segment and lack of immediate peers might attract demand based on a first-mover advantage, potentially leading to significant listing gains. While the 100% offer for sale (OFS) is a concern for new investors, Mehta Equities recommends subscribing to the Blue Jet IPO with a risk perspective, expecting decent listing gains.”
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“The company has a track record of sustained revenue and PAT growth, growing at a CAGR of 20.2% and 8.6% during the FY21-23 period, with strong RoE and ROCE of 26.6% and 31.9%, respectively, in FY23. Further, the growth in the CDMO model, robust financial performance and expanding production capacity are expected to drive the company’s performance going ahead. On the upper price band, the issue is valued at a P/E of 37.5x based on FY2023 earnings which we feel is fairly valued. We, therefore, recommend an ‘Subscribe’ rating for the issue.”
(The recommendations in this story are by the respective research analysts and brokerage firms. FinancialExpress.com does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)
