Blue Jet Healthcare Results: Net Profit Crashes 60% YoY; Should You Hold or Sell the Stock?

Synopsis: Pharmaceuticals share hit a 10% lower circuit after its Q3 results, with revenue down 40% YoY to ₹192 crore and net profit falling 59% YoY to ₹40.2 crore, followed by brokerage downgrading the shares due to weak execution.

The shares of the Small-Cap company specializing in the development and manufacturing of contrast media intermediates, high-intensity sweeteners (specifically saccharin), and niche APIs/pharmaceutical intermediates are in focus after its decline by 10 percent in the day’s trade following its Q3 Results.

With a market capitalization of Rs. 6,205.73 Crores on the Day’s Trade, the shares of Blue Jet Healthcare Ltd hit a 10 percent lower circuit, reaching a low of Rs. 357.75 compared to its previous close of Rs. 397.45.

What Happened

Blue Jet Healthcare Ltd, engaged in the development and manufacturing of contrast media intermediates, high-intensity sweeteners, and niche APIs/pharmaceutical intermediates, is in the spotlight following its Q3 results, as follows:

Its Revenue from operations declined by 40 percent YoY from Rs. 318 Crores in Q3FY25 to Rs. 192 Crores in Q3FY26, and it rose by 16 percent QoQ from Rs. 165 Crores in Q2FY26 to Rs. 192  Crores in Q3FY26.

Its Net profit YoY declined by 59 percent from Rs. 99.0 Crores in Q3FY25 to Rs. 40.2 Crores in Q3FY26, and on a QoQ basis, it declined by 23 percent from Rs. 52.1 Crores in Q2FY26 to Rs. 40.2 Crores in Q3FY26. The earnings per share (EPS) for the quarterly period stood at Rs. 2.32, compared to Rs. 3.01 in the previous quarter.

Brokerage views on the result

Global brokerage JPMorgan Chase has downgraded Blue Jet Healthcare to “Underweight” and reduced its target price to Rs. 330 per share. The revised valuation indicates a potential downside of nearly 17% from Friday’s closing price,

Reasons that may have led to the downgrade

Firstly, the company’s contrast media business has witnessed weak execution, declining at a 5% CAGR over FY23–26E due to the muted performance of its flagship product and the absence of meaningful new launches. 

Secondly, the PI and API segment, especially bempedoic acid, is facing pressure amid customer destocking. Growth visibility remains uncertain as Esperion has guided for significant gross margin improvement, indicating reduced outsourcing opportunities, and is shifting European manufacturing to Daiichi Sankyo, which already works with other CDMO partners. Additionally, Merck & Co. is developing a superior oral PCSK9 inhibitor with added Lp(a) benefits, posing further competitive risk to the bempedoic acid franchise.

Third, JPMorgan has also highlighted concerns around the company’s weak late-stage pipeline, with new product launches expected only beyond the next two years. The brokerage emphasized high product concentration risk, as two products contribute nearly 70–75% of total revenue, making earnings vulnerable to demand or competitive disruptions.

Considering these headwinds, JPMorgan has reduced its FY26, FY27, and FY28 EPS estimates by 11%, 18%, and 23%, respectively. The brokerage has also lowered its valuation multiple to 22x from 30x, reflecting reduced confidence in near-term growth prospects.

Blue Jet Healthcare Ltd is a specialty pharmaceutical and healthcare ingredients and intermediates company focused on niche, high-value products. Operating with a “Collaboration, Development, Manufacturing” approach, the company partners with global innovators and customers to deliver end-to-end CDMO solutions.

As of FY25, the company has built a diversified portfolio of 51 commercialized products, supported by a total reaction capacity of 1,177.9 KL across three manufacturing facilities. Demonstrating strong asset efficiency, it reported a Fixed Asset Turnover ratio of 3.97x in FY25, reflecting effective utilization of infrastructure and operational scale.

The company demonstrates strong financial performance, highlighted by an impressive ROCE of 39.8% and ROE of 30.2%, indicating efficient use of both capital and shareholders’ funds to generate profits. With a very low debt-to-equity ratio of 0.02, it operates with minimal financial leverage, reducing risk. 

Product Categories

Contrast Media & Intermediates: The company supplies critical starting materials and advanced intermediates used in contrast media for X-ray, CT, and MRI scans, enhancing tissue visibility in medical imaging. 

It maintains long-term (4–26 years) relationships with three of the world’s largest manufacturers, operating in a market where the top four players hold ~75% share. This segment has 19 commercialized products and contributes 39.40% of FY25 revenue, serving predominantly regulated markets.

High-Intensity Sweeteners: The company develops, manufactures, and markets saccharin and its salts, supplying over 300 customers globally. These sweeteners are widely used in table-top products, beverages (especially soft drinks), oral care, confectionery, pharmaceuticals, food supplements, and animal feed. With 4 commercialized products, this segment contributes 13.00% of FY25 revenue and serves marquee FMCG and agrochemical clients worldwide.

Pharma Intermediates & APIs: The company collaborates with innovator pharmaceutical and multinational generic companies, providing intermediates that act as building blocks for APIs in chronic therapeutic areas such as cardiovascular (CVS), central nervous system (CNS), and oncology. It has 28 commercialized products and over 56 global customers (including 40 in India). This is the largest segment, contributing 45.10% of FY25 revenue.

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