Blue Jet Healthcare’s IPO Receives Strong Interest from Non-Institutional and Retail Investors
The initial public offer (IPO) of pharmaceutical intermediates manufacturer, Blue Jet Healthcare, has garnered significant attention from investors on its first day. The ₹840 crore IPO, which is a complete offer-for-sale, saw a subscription rate of 69% the end of the day. The non-institutional investor portion was fully subscribed, while the retail portion reached a subscription rate of 78%. However, the qualified institutional buyer (QIB) portion received very few bids.
The IPO, which has a price band set at ₹329-346 per equity share, does not entail the company receiving any proceeds from the share sale. The offer will remain open until October 27, and investors are required to bid for a minimum of 43 shares or in multiples thereof.
Kotak Mahindra Capital, ICICI Securities, J P Morgan India are serving as the book running lead managers, with Link Intime India acting as the registrar to the offer. The equity shares are scheduled to be listed on both the BSE and NSE.
According to the subscription details, the QIB portion was subscribed only 0.01 times, while the non-institutional investor portion saw a subscription rate of 1.37 times and retail investors at 0.78 times. In total, the IPO was subscribed 0.69 times.
Blue Jet Healthcare, originally incorporated as Jet Chemicals in 1968, operates under the brand name Blue Jet and specializes in manufacturing contrast media intermediates, high-intensity sweeteners like saccharin, salts, and active pharmaceutical ingredients (APIs). The company claims to have developed over 100 products, of which 40 have entered the commercial market.
As of June 30, 2023, Blue Jet Healthcare operates three manufacturing facilities located in Shahad, Ambernath, and Mahad in Maharashtra.
In terms of financial performance, the company reported revenues of ₹721 crore in FY23, ₹683 crore in FY22, and ₹498 crore in FY21. Its consolidated profit after tax (PAT) stood at ₹160 crore in FY23, ₹181 crore in FY22, and ₹135 crore in FY21.
Analysts have praised Blue Jet Healthcare for its presence in niche categories with high entry barriers, as well as its strong product development and process optimization capabilities. The company also enjoys longstanding relationships and multi-year contracts with multinational clients, not only for supply agreements but also for warehousing and logistics.
“At the upper price band, the company is valued at a P/E ratio of 34x, with a market cap of ₹6,001 crore post-issuance of equity shares. We believe that the valuation is fair and recommend a ‘subscribe-long term’ rating for the IPO,” stated Anand Rathi.
Rajan Shinde, a research analyst at Mehta Equities, expressed the view that the IPO is fully priced. However, he also highlighted Blue Jet’s unique niche product segment and the lack of immediate peers, which could potentially attract demand based on a first-mover advantage and lead to significant listing gains. Mehta Equities therefore recommends subscribing to the Blue Jet IPO, taking into account the associated risks and expecting decent listing gains.