Small-cap stock soars 76% in 1 year; Motilal Oswal sees 26% more upside— a potential multibagger in the making?

Small-cap stock: Blue Jet Healthcare share price jumped over 6 per cent in intraday trade on the BSE on Wednesday, April 30, looking set to snap its three-day losing run after domestic brokerage firm Motilal Oswal Financial Services initiated coverage on the stock with a buy recommendation, suggesting the potential for multibagger returns. The small-cap stock opened at ₹690 against its previous close of ₹686.70 and rose over 6 per cent to an intraday high of ₹729.25. Around 11 AM, Blue Jet Healthcare share price traded 5.61 per cent higher at ₹725.20. Equity benchmark Sensex was flat at 80,293 at that time.

Blue Jet Healthcare share price trend

Blue Jet Healthcare share price has been on a roll over the last year, surging 76 per cent as of April 29 close.

Shares of Blue Jet Healthcare debuted on the Indian stock exchanges on November 1, 2023. In just about a year and a half, the stock has rallied 98.5 per cent from its issue price of ₹346. Based on today's high of ₹729.25, it has more than doubled investors’ money, delivering multibagger returns of 111 per cent.

The small-cap stock recently hit its 52-week high of ₹968.75 on March 21 this year, whereas it hit a 52-week low of ₹346.70 on June 4 last year.

However, it has seen selling pressure in April. As of the previous session's close, the stock has suffered a loss of 22 per cent this month and is set to snap its five-month winning streak.

Motilal turns bullish on the stock

Despite stellar gains over the last year, domestic brokerage firm Motilal Oswal Financial Services believes the stock has more room to grow.

The brokerage firm has initiated coverage on the stock with a 'buy' recommendation. Motilal has given a target price of ₹865, implying a 26 per cent upside potential from the stock's April 29 close.

"With its niche product offerings in contrast media and pharmaceutical intermediaries and API (active pharmaceutical ingredient), Blue Jet Healthcare has been changing how the healthcare industry caters to the therapeutic needs of patients around the globe," Motilal Oswal noted.

"The company has established itself as a reliable supplier to its customers for the past three decades and is now working toward moving up the value chain by significantly increasing its investment in R&D (research and development)," the brokerage firm added.

Motilal said Blue Jet Healthcare's revenue growth will be driven by new products in iodinated and gadolinium contrast media, NCE intermediates, and a high-intensity sweetener variant.

The brokerage firm also said the PI/API segment is set for strong growth, with a ramp-up in supplies for Esperion’s Bempedoic acid in the coming quarters.

Taking note of the existing products ramping up and new product launches, Motilal Oswal expects Blue Jet Healthcare to post a CAGR of nearly 27 per cent, 24 per cent and 19 per cent in revenues, EBITDA and PAT, respectively, over FY25-27E.

Motilal also expects a sharp uptick in the pharma Intermediaries segment, and an average EBITDAM of 35.1 per cent during FY25-27E.

On the valuation front, according to Motilal Oswal, the stock is trading at a PE (price-to-earnings) of nearly 28 times on FY27E EPS (earnings per share) of ₹24.7 and FY27E EV/ EBITDA (enterprise value to earnings before interest, taxes, depreciation and amortisation) of nearly 20 times.

Read all market-related news here

Read more stories by Nishant Kumar

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.