Blue Jet Healthcare Q1 FY27 earnings call

Blue Jet Healthcare commenced FY27 with an encouraging Q1, reporting revenue from operations of INR293 crores and an EBITDA of INR98 crores. This reflects a healthy sequential improvement in operating performance, with the operating EBITDA margin expanding to 33.5% from 30.4% in the previous quarter. The growth was primarily driven by stronger performance in the PI vertical, following the normalization of customer inventory, while contrast media and high-intensity sweeteners maintained stability.

The company is making significant progress on its long-term strategic initiatives. The Vizag project, a major growth platform, has commenced execution with key statutory approvals in place, representing an investment of approximately INR1,000 crores over the next three years for Phase 1. Additionally, the Hyderabad R&D center is on track to become operational in August 2026, and the Unit 3 backward integration project is progressing well, with commercial contribution expected in the second half of FY27.

Blue Jet Healthcare is focused on diversifying its product portfolio. During FY27, the company expects to launch three new candidates within the Contrast Media segment and initiate pilot activities for a new high-intensity sweetener. From a pipeline of 20 high-conviction NCE opportunities, four programs in the chronic therapy space are progressing well through customer development activities, strengthening the company's ability to participate in larger, more complex programs.

The reported gross margin for Q1 FY27 stood at 53%, a 3% reduction from the previous quarter, primarily due to raw material price increases and product mix. Management noted a significant increase in raw material prices post-March due to geopolitical situations, making future forecasting difficult. However, the company's CDMO business model allows for pass-through of cost variances to customers, albeit with a lag.

Contrast Media revenue declined by approximately 40% sequentially in Q1 FY27. This was attributed to transit delays caused by non-availability of containers and longer transit times due to geopolitical situations, resulting in higher goods in transit. Approximately INR30 crores of revenue, which would have been recognized in Q1, is now expected to be recognized in Q2 FY27.

The company has outlined a capital expenditure plan of approximately INR1,000 crores over the next three years, with INR250 crores specifically allocated for FY27. This investment will support the Vizag expansion, Unit 3 backward integration, and the new Hyderabad R&D center, aiming to build a globally competitive innovation-led CDMO platform.