A small-cap pharma stock is witnessing intense selling pressure after the release of its Q1 results. Blue Jet Healthcare share price crashed over 7 per cent in intraday trade on the BSE on Wednesday, July 23, falling almost 17 per cent in three days. The small-cap stock opened at ₹840 against its previous close of ₹906.15 and crashed 7.3 per cent to an intraday low of ₹840. Around 11:50 AM, Blue Jet Healthcare share price traded 4.76 per cent lower at ₹863.
Blue Jet Healthcare is a specialty pharmaceutical and healthcare ingredient and intermediate company. It operates under a contract development and manufacturing organization (CDMO) business model.
Why is Blue Jet Healthcare’s share price falling?
Blue Jet shares are witnessing strong selling after the company reported a sharp quarter-on-quarter (QoQ) fall in profit, profit margin, EBITDA and EBITDA margin for Q1FY26.
After market hours on Tuesday, July 22, Blue Jet Healthcare reported a 17.2 per cent QoQ fall in profit after tax (PAT) at ₹91.2 crore for Q1FY26. Consequently, PAT margin dropped by 664 bps QoQ to 25.7 per cent.
Similarly, EBITDA declined 13.6 per cent QoQ to ₹121 crore and EBITDA margin shrank by 701 bps to 34.1 per cent.
Revenue from operations climbed by 4.2 per cent QoQ to ₹354.8 crore.
However, the company’s Q1FY26 performance improved on a year-on-year (YoY) basis.
Revenue from operations jumped 117.8 per cent, PAT surged 141.3 per cent, and PAT margin improved 251 bps YoY. EBITDA rose by 173.3 per cent and EBITDA margin climbed 693 bps YoY.
“Blue Jet Healthcare clocked a revenue of ₹3,548 million, a growth of 117.8 per cent YoY, with EBITDA coming in at ₹1,210 million. This was primarily driven by the ramp-up in PI and API product categories. The robust growth, coupled with strong EBITDA margins, reflects our focus on operational efficiency and a solid business foundation,” said Shiven Arora, Managing Director, Blue Jet Healthcare.
“Looking ahead, we remain confident in our growth strategy, driven by capacity expansions, enhanced R&D capabilities, and a robust pipeline of high-value products. We are committed to delivering long-term value to our stakeholders through consistent performance, innovation, and strategic investments,” Arora said.
Is it time to buy Blue Jet shares after Q1 results?
The negative margin reported in Q1 seems to have surprised experts. However, some of them expect a reversal in the near term.
Brokerage firm Emkay Global Financial Services, which has maintained a buy call on the stock but trimmed the target price to ₹1,050 from ₹1,150 earlier, said while EBITDA was below estimates, a reversion in gross margin is likely in the near term.
“EBITDA undershot expectations on account of a sharp QoQ decline in gross margin. The gross margin weakness was primarily attributed to a reduction in inventory levels and the corresponding direct overheads hitting the P&L (nearly 440 bps impact QoQ), and partly to a change in the product mix in favour of pharma intermediates (nearly 210bps impact QoQ),” Emkay observed.
The brokerage firm expects gross margin to revert to 53 per cent in Q2, which is in line with the company’s guidance.
Emkay’s expectation on margin rebound is based on the fact that the company’s gross margin has broadly remained in the 53-56 per cent range over the last three years.
The brokerage firm noted that although the product mix appears weaker compared to historical trends, this should be offset by backwards integration efforts and new launches in the contrast media intermediates segment. Moreover, no major disruptions in raw material costs are expected.
A further uptick in utilisation in Blue Jet’s dedicated capacity for the Bempedoic Acid intermediate will remain the key driver of near-term earnings performance, Emkay said.
The brokerage firm has cut FY26E and FY27E EPS estimates by nearly 9 per cent and 4 per cent, respectively, moderating its gross margin assumptions.
While investors with a long-term horizon may consider buying the stock, technical experts do not suggest buying at this juncture.
According to Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers, Blue Jet Healthcare has breached its bullish trendline, signalling a potential shift in momentum.
Patel observed that a notable triple top formation has emerged in the ₹1,000– ₹1,020 zone, reinforcing resistance at higher levels.
“The stock is currently trading near ₹860, and analysts anticipate a base-building phase in the ₹780– ₹820 range. For now, fresh buying is discouraged. Key short-term support is placed at ₹830, while resistance is seen around ₹900,” said Patel.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
