IPO listed on 1 Nov'23
Blue Jet Healthcare Ltd
Minimum Investment
₹ 14,878 / 43 shares
Grey market premium
₹ 63 (18% premium)
Issue price
₹ 346
Listing price
₹ 380
Listing day %
14%
Listing on
Nov 1, 2023
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- While the firm showcases a consistent increase in revenue and earnings, it's concerning to see a noticeable drop in its profit margins and performance indicators. Furthermore, the heavy dependency on its principal customer, making up roughly 63% of sales, is a red flag. These issues, along with the risks outlined below, present reservations.
- At the top end of the price band, the issue seems fully priced at a P/E multiple of 34x on annualised FY24 earnings. The grey market premium (GMP) for the issue, however, indicates a premium listing.
- Considering the overall scenario, risk-tolerant investors can consider participating in this IPO just for listing gains. Investors must note that the issue is solely an offer for sale, meaning no funds will be directed to the company's future growth or development.
About the company
Founded in
7 Dec'68
Managing director
Shiven Arora
- Blue Jet Healthcare Ltd (BJHL) specializes in pharmaceutical and healthcare ingredients, producing niche products for innovator pharmaceutical firms and multinational generic pharmaceutical entities.
- Its business activities are divided into three product categories: (i) contrast media intermediates, (ii) high-intensity sweeteners, and (iii) pharma intermediates as well as active pharmaceutical ingredients (APIs).
STRENGTHS
- Steady Financials: From FY21 to FY23, BJHL exhibited a decent growth trajectory with a compounded annual growth rate (CAGR) of 20% in Revenue, 3% in EBITDA, and 9% in Net Profit.
- Dominant Position in a Niche Market: BJHL holds a significant position as a prominent manufacturer of contrast media intermediates in India, a sector with substantial entry barriers. It predominantly provides vital intermediates to three global giants in contrast media manufacturing: GE Healthcare AS, Guerbet Group, and Bracco Imaging S.p.A.
- Durable Client Relationships: The firm boasts multi-year agreements with its clientele, spanning one to four years, which ensure a consistent revenue stream. In the last three fiscals, over 70% of the sales were secured by annual and multi-year contracts.
RISK FACTORS
- Dipping Profit Ratios: The company has observed a significant drop in its profitability ratios. The EBITDA margin decreased from 41.3% in FY21 to 36.5% in FY22 and further declined to 30.4% in FY23. Similarly, the net profit margin shrank from 27.2% in FY21 to 22.2% in FY23.
- Declining Trend in Return Metrics: The Return on Capital Employed saw a decline from 49.7% in FY21 to 31.9% in FY23. Concurrently, the Return on Equity (ROE) dipped from 50.2% to 26.6% within the same timeframe.
- Dependency on Key Clients: A considerable chunk of the company's revenue comes from a limited number of key clients. The potential loss of any of these customers could be detrimental to its business. Notably, in Q1FY24 and FY23, sales from its biggest client constituted ~60% and 63% of its total sales.
- Exposure to Currency Fluctuation Risks: With a large part of its revenue in foreign denominations, the company faces significant exchange rate risks. In the last three fiscals, overseas sales accounted for more than 80% of the total revenue.
Issue details
Issue type
Mainstream
Issue size
₹ 840.27 crore
Fresh Issue
₹ -
OFS
₹ 840.27 crore
Price range
₹ 329 - 346
Lot size
43 shares
Issue Objective
This issue is a pure Offer for Sale (OFS), which means the company will not receive any proceeds from the offer. All the offer proceeds will be received by the selling shareholders, in proportion to the shares sold by them.
Dates
Bidding open
25 Oct'23
Bidding close
27 Oct'23
Allotment date
30 Oct'23
Refund date
31 Oct'23
Listing
1 Nov'23
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
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