Blue Jet Healthcare PI recovery and CDMO investments support FY26-28 growth outlook

Investment View and Growth Outlook

Motilal Oswal Financial Services retained its Buy rating on Blue Jet Healthcare in its August 3, 2026 report, with a target price of Rs 710 compared with the current market price of Rs 590. The broker expects the pharma intermediates (PI) business to recover through FY27 as customer inventories normalise, supported by a strong order book and visibility across four chronic-therapy products.

Growth is also expected from contrast-media product launches, pilot activity for a new high-intensity sweetener, and investments in Vizag, Hyderabad and contract development and manufacturing organisation (CDMO) capabilities. Motilal Oswal forecasts revenue, EBITDA and PAT CAGR of 19 per cent, 28 per cent and 25 per cent, respectively, over FY26-28.

1QFY27 Financial Performance

Blue Jet Healthcare reported 1QFY27 revenue of Rs 293 crore, down 17 per cent year-on-year but up 25 per cent quarter-on-quarter, and ahead of Motilal Oswal's estimate of Rs 280 crore. PI revenue, which contributed about 41 per cent of sales, declined 43 per cent year-on-year to Rs 120 crore due to a high base. However, it recovered materially sequentially from Rs 2.4 crore in 4QFY26 as customer restocking began.

Contrast-media intermediates and high-intensity sweeteners, representing about 40 per cent and 14 per cent of sales, respectively, grew 19 per cent and 14 per cent year-on-year. Gross margin was 53.2 per cent, up 480 basis points year-on-year but down 320 basis points sequentially because of product mix and raw-material costs.

EBITDA was marginally above the broker's estimate, while adjusted PAT was in line with expectations.

Demand Recovery and Product Pipeline

Management said PI and API demand showed good traction in 1QFY27. Normalised customer inventories are enabling resupply and consistent production, while the company has strong order-book visibility. Four chronic-therapy products in oncology and CNS are in the pilot phase, and Blue Jet Healthcare is qualified for international supply.

In advanced contrast media, logistics disruptions deferred around Rs 30 crore of revenue recognition into 2QFY27 and increased goods in transit. The contrast-media plant was operating at about 70 per cent utilisation. Management expects three new contrast-media launches during FY27, with commercial batches scheduled by late 2QFY27 or early 3QFY27.

High-intensity sweetener pilots are underway at the existing facility, with later scale-up planned at Vizag.

Expansion and Capital Expenditure

• The Hyderabad R&D centre was expected to become operational by August 2026 and will target products including GLP-1 and peptides.
• The Mahad backward-integration project for contrast-media intermediates was progressing slightly ahead of schedule. Phase-one commercialisation is expected in 2HFY27.
• Rs 210 crore had been spent on the Mahad project, with a further Rs 40 crore expected to complete phase one.
• Management guided for FY27 capex of Rs 400 crore.
• Vizag phase one will include contrast media, multipurpose blocks, flexible lateral-entry capacity, high-intensity sweeteners, peptides and intermediates.
• The Vizag project is expected to be commercialised by FY30, with ramp-up in FY31-32, under an estimated Rs 1,000 crore capex programme over three years.

Estimates, Valuation and Risks

Motilal Oswal raised its FY27 and FY28 revenue estimates by 3 per cent. EBITDA estimates were increased by 3 per cent and 4 per cent, respectively. EPS estimates declined by 6 per cent and 5 per cent because of post-QIP dilution.

The broker values Blue Jet Healthcare at 34 times FY28E EPS of Rs 20.5 to derive its target price of Rs 710.

Management commentary highlighted elevated and uncertain raw-material pricing as a risk. Pass-throughs in CDMO may take several quarters after input costs stabilise. The company is also taking a cautious and selective approach to peptides because of the risk of price erosion.