Blue Jet Healthcare Limited — Q2 FY25 earnings call

Call held 8 Nov 2024

Management summary

Blue Jet Healthcare reported a strong Q2 FY25, achieving its highest ever quarterly PAT of ₹58.3 crores, driven by a 28% sequential and 18% YoY increase in turnover to ₹207.1 crores. The company successfully commissioned Plant 6, adding 120 KL capacity for PI and contrast media, and initiated commercial production for a key cardiovascular therapy client. Despite ongoing Red Sea issues impacting goods in transit, management expressed confidence in demand across all segments and outlined plans for further capacity expansion and R&D augmentation.

Highlights

  • Q2 FY25 Turnover of ₹207.1 crores, up 28% sequentially and 18% YoY.

  • Q2 FY25 EBITDA at ₹69.5 crores, up 57% sequentially and 11% YoY.

  • Q2 FY25 PAT of ₹58.3 crores, highest ever quarterly profit, up 54% sequentially and 22% YoY.

  • H1 FY25 Turnover of ₹371.1 crores, up 3% YoY.

  • H1 FY25 PAT of ₹96.1 crores, up 4.5% YoY.

  • Plant 6 (120 KL capacity) commissioned at Unit 2 Ambernath for ₹90 crores, with commercial production for a PI client starting mid-September.

  • Maintained debt-free status with ₹323.3 crores in cash and treasury investments as of September 2024.

  • First ever dividend payout of ₹1 per share, totaling ₹17.35 crores.

Key financials

2 periods

Q2 FY25

  • Revenue
    ₹207.1 Cr
    YoY +18% QoQ +28%
  • EBITDA
    ₹69.5 Cr
    YoY +11% QoQ +57%
  • PAT
    ₹58.3 Cr
    YoY +22% QoQ +54%
  • Gross Margin
    57%
    QoQ +2%
  • Cash Conversion
    76%
  • Working Capital
    140 days

H1 FY25

  • Turnover
    ₹371.1 Cr
    YoY +3%
  • EBITDA
    ₹113.7 Cr
    YoY -6.4%
  • PAT
    ₹96.1 Cr
    YoY +4.5%

What they filed

Q1 FY27: revenue down 17.5%, net profit down 14.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue208 318 340 355 165 −21%192 −40%235 −31%293 −17%
EBITDA69 124 140 121 55 −20%47 −62%71 −49%98 −19%
Net profit58 99 110 91 52 −10%40 −60%64 −42%78 −14%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Turnover (H1 FY25)
₹357.7 Cr Total
  • Contrast Media ₹177.9 Cr 49.7%
  • Pharmaceutical Intermediate ₹119.8 Cr 33.5%
  • Artificial Sweetness ₹60 Cr 16.8%

Guidance & targets

Capacity Utilization

  • Plant 6 Optimal Capacity Utilization Capacity Utilization · Q3 and Q4 FY25 · High confidence Optimal utilization
    We anticipate reaching our optimal capacity utilization in Q3 and Q4.

    — Shiven Arora, Managing Director

Commercial Supplies

  • Advanced Intermediate (NCE in MRI space) Commercial Supplies Commercial Supplies · Quarter three onward (FY25) · High confidence Commencement
    We expect commercial supplies to commence from this capacity in quarter three onward.

    — VK Singh, Chief Operating Officer

Capacity Commissioning

  • Small Volume Plant (Unit 2) Commissioning Capacity Commissioning · Quarter one of FY '26 · High confidence Ready for commissioning
    At Unit 2, we are also building a small volume plant, which we envisage will be ready for commissioning in quarter one of FY '26.

    — VK Singh, Chief Operating Officer

  • Unit 3 (Mahad) Backward Integration Capacity Commissioning Capacity Commissioning · Quarter one, FY '26 · High confidence Commissioned
    We believe that this new capacity will get commissioned, as we had indicated in the past, in quarter one, FY '26.

    — VK Singh, Chief Operating Officer

Demand Stabilization

  • Contrast Media Customer Demand Demand Stabilization · Q4 '25 onwards · Medium confidence Stabilize
    For contrast media category, Q2 supplies were steady, and we expect the demand for customers to stabilize from Q4 '25 onwards.

    — Shiven Arora, Managing Director

Capex

  • Annual Capex Capex · Annually · High confidence ₹200 crores annually
    Yes, so I think we are on track for our capex plans. I think our initial guidance was, on a base case, INR200 crores annually. But we are also exploring other options from a manufacturing footprint standpoint. So we maintain our guidance.

    — Shiven Arora, Managing Director

Contrast Media Volume

  • Full year volume vs last year Contrast Media Volume · Full year (FY25) · Medium confidence Come closer to last year's numbers
    in terms of volume, if you look at contrast media as a segment, we believe we should be in a position to come closer to our last year's numbers.

    — Ganesh Karuppannan, Chief Financial Officer

Enzymatic Process Commercialization

  • Commercialized product from enzymatic process Enzymatic Process Commercialization · Next year · Medium confidence Yes
    As of now, no. But, maybe next year, yes. We are very close to commercializing this work.

    — VK Singh, Chief Operating Officer

Pharma Intermediate Utilization

  • 120 KL plant utilization Pharma Intermediate Utilization · Q3, Q4 (FY25) · High confidence Peak utilization
    Yes, that would be the aspiration. I think we are inching towards it. Month-on-month, we see improved efficiencies and better experience when it comes from a scale-up standpoint. So, in the next two quarters, I think we should ramp up to our customers' expectations.

    — Shiven Arora, Managing Director

Risks & concerns

  • Red Sea issues impacting goods in transit and revenue recognition.

    medium

    Transit time doubled from 30-35 days to 55-60 days, delaying revenue recognition by a quarter (₹60-70 crores shifted).

    Management acknowledged

  • Customer off-take for contrast media being lower than previous year.

    medium

    H1 FY25 contrast media turnover was down 31% YoY, partly due to lower off-take from a key customer for calendar year 2024. Expects to return to old levels in next calendar year.

    Management acknowledged

  • Competition from GLP-1 drugs for cardiovascular products.

    low

    Management believes their cardiovascular product is first-line treatment, GLP-1s are mostly injectables, and direct GLP-1 competitors are not yet on the market or years away. Generic competition is seen as a more immediate threat.

    Analyst downplayed

Areas of evasion (1)

  • Specific details about a key customer's capacity expansion plans.

Q&A highlights

3 direct
Impact of Red Sea issues on revenue recognition and contrast media sales. Direct
This INR42 crores otherwise would have been revenue, right? Which are because of the Red Sea issue delays the delivery, is not getting recognized as revenue, correct? ... You are right. ... It will be around INR60 crores to INR70 crores.

Clarifies that a significant amount of revenue (₹60-70 crores) was delayed from Q1/H1 to Q3 due to transit issues, providing context for reported numbers and future expectations.

Asked by Sanjesh Jain

Long-term margin outlook for the company's product mix. Direct
See, based on the current portfolio, I would believe the margin would be in a similar range, maybe plus or minus 2%. So, this quarter, because of a higher goods in transit, normally the overhead gets capitalized. So, the margin is marginally higher. So, I would actually take it somewhere around 53% to 55%. And that should be a reasonable estimate for the current product mix.

Provides a clear range for expected steady-state gross margins, crucial for investor modeling, and explains the temporary Q2 margin boost.

Asked by Sudarshan Padmanabhan

Potential impact of GLP-1 drugs on demand for their cardiovascular product. Direct
The second point is that the product that we are talking about is actually the first line of treatment. It is quite possible that these GLP-1s may not for several indications be the first line of treatments. Besides most of these GLP-1s will be injectables... Right now, the type of GLP that you are speaking about that can go head on with the product is not there on the market... So I would say that for the molecule that we are speaking about without taking any names, the generic competition will be more credible than the competition from anything of the sort that you are mentioning.

Addresses a significant sector-wide concern (GLP-1 impact) and provides management's detailed rationale for why their specific cardiovascular product is not immediately threatened.

Asked by Sanjesh Jain

2 min read 6 chapters

Detailed narrative

Strong Q2 FY25 Performance Driven by Capacity Expansion

Blue Jet Healthcare delivered a robust Q2 FY25, with turnover reaching ₹207.1 crores, marking a 28% sequential and 18% year-on-year growth. This strong performance translated into a record-high quarterly PAT of ₹58.3 crores, representing 28% of total revenues and a 22% YoY increase. The company also reported a healthy EBITDA of ₹69.5 crores, up 11% YoY, and maintained a debt-free status with ₹323.3 crores in liquidity as of September 2024.

Strategic Capacity Additions and Commercialization Milestones

The company successfully commissioned Plant 6 at Unit 2 Ambernath, adding 120 KL of capacity at a cost of ₹90 crores, primarily for PI and contrast media segments. Commercial production for a key cardiovascular therapy client commenced in mid-September, with optimal utilization anticipated by Q3-Q4 FY25. Additionally, validation batches for an advanced intermediate in the MRI space are ongoing, with commercial supplies expected to begin in Q3 FY25.

H1 FY25 Performance and Segmental Dynamics

For the first half of FY25, Blue Jet Healthcare reported a turnover of ₹371.1 crores, a 3% increase YoY, and a PAT of ₹96.1 crores, up 4.5% YoY. While the contrast media segment saw a 31% de-growth in H1 FY25 to ₹177.9 crores, attributed to lower customer off-take and Red Sea transit delays, the pharmaceutical intermediate segment surged by 282% to ₹119.8 crores. The artificial sweetness segment maintained stable turnover at approximately ₹60 crores.

Addressing Red Sea Impact and Revenue Recognition

Management clarified that Red Sea issues have prolonged transit times from 30-35 days to 55-60 days, impacting revenue recognition. Approximately ₹60-70 crores of revenue, predominantly from contrast media, were delayed from Q1/H1 and are expected to be recognized in Q3. Despite these delays, the company expects contrast media demand to stabilize from Q4 FY25 and aims to achieve full-year volumes comparable to the previous year.

R&D Focus on Enzymatic Chemistry and Pipeline Expansion

Blue Jet Healthcare is actively expanding its R&D capabilities, having doubled its R&D hardware and scientific talent pool in the last 12 months. The company is exploring new chemistry platforms, including enzymatic processes, which offer advantages in chiral selection and significantly lower effluent generation (1:50 ratio). Management indicated that commercialization of products from enzymatic chemistry is 'very close' and could commence as early as next year, targeting both general products and CDMO opportunities.

Capex Plans and Long-Term Growth Outlook

The company's capital expenditure plans remain on track, with an annual guidance of ₹200 crores. Beyond Plant 6, Blue Jet is developing a small volume plant at Unit 2 for Q1 FY26 commissioning, aimed at proof-of-concept and GMP validation. Unit 3 at Mahad is also being developed for backward integration in contrast media, with commissioning targeted for Q1 FY26, supporting the company's long-term strategic independence and cost leadership goals.

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