Blue Jet Healthcare Limited IPO Summary

About the Company

Incorporated in the year 1968, Blue Jet Healthcare Limited is a speciality pharmaceutical, healthcare ingredients and intermediates company.

The operations of the company are primarily organized in three product categories:

Contrast media intermediates:- Contrast media intermediates are agents used in medical imaging to enhance the visibility of body tissues under X-rays, computed tomography (CT), magnetic resonance imaging (MRI) or ultrasound.

High-intensity sweeteners:- The high-intensity sweetener business involves development, manufacture and marketing of saccharin and its salts. Saccharin is primarily used in table-top sweeteners, oral care products such as toothpastes and mouthwashes, beverages (primarily soft-drinks), confectionary products (such as mints, candies, and bakery products), pharmaceutical products, food supplements and animal feeds.

Pharma intermediates and active pharmaceutical ingredients (APIs):- The activity in the pharma intermediate and API business primarily focuses on collaborating with innovator pharmaceutical companies and multi-national generic pharmaceutical companies by providing them with pharma intermediates that serve as building blocks for APIs in chronic therapeutic areas, such as the cardiovascular system (“CVS”), oncology and central nervous system (CNS), including new chemical entities (NCEs).

For the FY 2022-23, the contribution of the three business segments to the revenue from operations was as follows :-

The company derives a majority of revenue from the regulated markets of Europe. For FY 2022-23, the contribution of different geographies to the revenue from operations was as follows:-

The company currently operates three manufacturing facilities, which are in Shahad (Unit I), Ambernath (Unit II) and Mahad (Unit III) in the state of Maharashtra, India, with an annual installed capacity of 200.60 kl, 607.30 kl, and 213.00 kl, respectively, as of June 30, 2023 and the company serves 136 domestic and 32 international customers.

Industry Overview

The Indian economy has grown by 7.2% in Financial Year 2023 and the growth rate is expected to stabilize at around 6-7% between CY 2023 to CY 2027. Key drivers for India’s GDP growth include rising domestic consumption supported by rising purchasing power of the population, India’s push for domestic manufacturing and its impact on creation of jobs locally, and favourable policy support.

The global contrast media formulation market had a market size of US$ 5.9 billion in terms of moving annual turnover for June 2023. The market is expected to grow at a CAGR of 6-8% between the calendar years 2023 and 2025, with growth expected to be primarily led by volume.

In 2023, the global high-intensity sweetener market was estimated to be a US$2.9 to US$3.0 billion (approximately ₹232–₹240 billion) in size, comprising products such as Sucralose, Aspartame, Saccharine and Stevia and Neotame. The high-intensity sweeteners market is estimated to grow at a CAGR in the range of 6% to 7% over the next 5 years.

The global formulation market was estimated at US$ 1,381.54 billion (Rs. 103,615.5 billion) in MAT June 2023. The United States formed 48.33%of the global pharmaceuticals market in MAT June 2023. The US is expected to remain the key contributor to growth in the major developed markets and is expected to grow at a CAGR of 5-6% over MAT June 2023-2027.

Two emerging markets, namely Brazil and India, together form 3.83% of the global pharmaceuticals market. Both Brazil and India pharmaceutical markets are forecast to grow at 10-11% CAGR over MAT June 2023 – MAT June 2027, which is one of the fastest growth rates among the emerging markets .

IPO Objectives

The entire issue, being an offer for sale, the company will not directly receive any proceeds from the offer and all the proceeds will be received by the selling shareholders, in proportion to the shares sold by the respective selling shareholder.

Financials

The company's Revenue exhibited significant growth, increasing from Rs. 498.93 crores in FY 2020-21 to Rs. 720.98 crores in FY 2022-23, reflecting a CAGR of 20.21%. During the same period, the company's EBITDA expanded from Rs. 206.05 crores in FY 2020-21 to Rs. 219.09 crores in FY 2022-23, achieving a CAGR of 3.11%. Furthermore, the EBITDA margin saw an increase from 9.21% to 15.73%.

The company's net profit also experienced growth, rising from Rs. 135.79 crores in FY 2020-21 to Rs. 160.03 crores in FY 2022-23, with a CAGR of 8.56%. However, there was a decrease in the net profit margin, declining from 27.22% to 22.20% over the same period. This disparity between revenue and profit growth can be attributed to heightened raw material and tax expenses.

Additionally, the company's ROCE and ROE both witnessed declines, moving from 49.70% to 31.91% and 50.18% to 26.60%, respectively, for the period spanning FY 2020-21 to FY 2022-23.

Valuation

The company has a PE ratio of 34.06 and a PB ratio of 8.27. Nevertheless, it's challenging to assess the company's relative valuation because there are no listed industry peers for comparison.

Key Risks

1. The business of the company is dependent on the sale of its products to a limited number of key customers. The loss of one or more such customers, the deterioration of their financial condition or prospects, or a reduction in their demand for its products could adversely affect the business, results of operations, financial condition, and cash flows of the company. For FY 2022-23, 83.74% of the revenue from operations was generated from the ten largest customers of the company.

2. The company depends upon a limited number of raw material suppliers and the three largest suppliers are in China, Norway, and India. Any delay, interruption or reduction in the supply or transportation of raw materials or an increase in the costs of such raw materials to manufacture the products may adversely affect the business, results of operations, financial condition, and cash flows of the company. For FY 2022-23, 59.53% of the raw material consumed was sourced from the three largest suppliers and 46.38% of the raw material consumed was imported from China and Norway.

3. The manufacturing facilities and procurement operations are concentrated in one state, Maharashtra, and any adverse developments affecting this region could have an adverse effect on the business, results of operations and financial condition of the company.

IPO Details