Add Sagility India, target price Rs 55: ICICI Securities

ICICI Securities has an add call on Sagility India with a target price of Rs 55. The current market price of Sagility India Ltd. is Rs 48.95.

Four-pronged go-to-market strategySagility India Management's four-pronged strategy includes: 1) Continued mining of top clients ? e.g. several top clients continue to grow in double digit, thus, increasing wallet share, 2) investing heavily to increase penetration into mid and smaller segment payers as Blue Ocean, 3) investing in technology such as AI, full scale platform based solutions, solution-bundling, and 4) M&A to enable inorganic growth, especially focussing on capability-based or mid-market segment acquisitions.

Investment Rationale
Sagility India is a healthcare domain specific, nearly exhaustive operational services play in US health tech space with a payer-led portfolio (89.2% of Q2FY25 revenue), now growing fast in provider space, too. Key USPs that complement the existing healthcare industry tailwinds include: 1) Top-10 clients comprising top-5 US healthcare payers and 3 of the top-6 PBM plays, 2) wide gamut of offerings, 3) expanding client reach led by refreshed sales strategy, 4) EQT's backing- professional expertise, connections and capital sponsorship and guidance for identifying and executing inorganic growth targets.


With complete debt repayment by FY27 and acquisition earnouts by FY26, Sagility would be on an unhindered path of EPS growth. ICICIC Securities expectsrevenue/adj EBITDA/EPS CAGR of 13.7%/14.5%/52.5% over FY24-27E. They have initiated coverage with ADD, valued at a target of 12M forward P/E of 26x (~5 year average + 1 SD P/E of larger peer Firstsource) to arrive at the target price of Rs 55.