Jefferies Equity Research has initiated coverage on Sagility India Ltd., noting the healthcare services provider’s strong positioning as a leading US-focused business process management firm, with domain expertise.
Sagility, which listed on Nov. 11, is expected to deliver double-digit revenue growth, according to the brokerage. Jefferies has assigned a ‘buy’ rating to the stock with a price target of Rs 43.58, reflecting a 19% upside from previous close. Its listing price was Rs 31.06.
Sagility India provides technology-enabled BPM services to the US healthcare industry, including end-to-end services for payers and revenue cycle management for providers. The company serves five of the top 10 US healthcare payers by enrollment as of January 2024 and operates with over 38,000 employees across locations in the US, Colombia, Jamaica, the Philippines, and India, the report stated.
In the September quarter, the company reported a net profit jump by 236% year-on-year. Its consolidated net profit for the reporting quarter came in at Rs 117 crore as against Rs 35 crore in the same quarter a year ago. Revenue rose 21.1% to Rs 1,325 crore and Ebitda was 28.2% higher at Rs 300 crore. Ebitda margin came in at 22.6% as against 21.4%.
“Our runway for growth is long and is backed by a combination of favourable industry dynamics, our strategic investments in advanced technologies, including AI, and a strong orientation towards creating value for our clients,” the company said in a media statement.
Jefferies expects Sagility’s revenue to grow at an annualised rate of 11% in dollar terms and 12.5% in rupee terms over fiscal 2025 through 2027, driven by client expansions and scaling new mid-market accounts. Profit growth is projected at 40% annually during the same period, supported by normalised depreciation and amortisation costs, as well as deleveraging of its balance sheet.
While the brokerage acknowledged risks related to Sagility’s concentration in the US healthcare market and potential promoter stake reductions, it noted the company’s strong earnings growth outlook and sticky revenue model. Jefferies has valued Sagility at 31 times its estimated fiscal 2026 earnings, consistent with its current valuation.
Shares of the company closed 0.92% higher at Rs 43.90 per share, compared to a 1.02% decline in the NSE Nifty 50. The stock has risen 49.32% since listing. NDTV Profit