Sagility India gains 5%; investors laud Q3 results, BroadPath acquisition

Sagility India share price was locked in the 5-per cent upper circuit band at Rs 52.63 per share on Thursday

Sagility India share price was locked in the 5-per cent upper circuit band, at Rs 52.63 per share, on the BSE on Thursday, a day after the company reported its Q3 results.

 

At 10:31 AM, Sagility India shares were at the upper circuit band as against 0.23-per cent decline in the benchmark BSE Sensex.

 

Sagility India, which listed on the stock exchanges on November 12, 2024, reported an adjusted net profit of Rs 262.6 crore in the December quarter of the current financial year (Q3FY25). This was a growth of 67.6 per cent over the previous year profit of Rs 156.7 crore.

 

 

Operationally, Sagility India Q3 revenue stood at Rs 1,453.1 crore, up 15.3 per cent year-on-year (Y-o-Y) from Rs 1,260.2 crore.

 

The traction was led partially by open enrolment-led positive seasonality. Payer / provider segment grew 13 per cent/ 38.6 per cent Y-o-Y. This is the second quarter of provider growth acceleration as the company pivots towards increased traction in the provider segment.

 

Provider segment is a high growth segment led by lower outsourcing penetration and shortage of staff in clinical operations. Payer now forms 89.3 per cent of quarterly revenue as against 89.2 per cent in Q2FY25.

 

Ebitda (earnings before interest, tax, depreciation, and amortisation), too, climbed 67.3 per cent Y-o-Y to Rs 456.7 crore from Rs 273 crore. Adjusted Ebitda margin expanded to 31.4 per cnt, up 593 basis points Q-o-Q, led by positive seasonality and operational efficiency.

 

On a quarter-on-quarter (Q-o-Q) basis, revenue advanced from Rs 1,325 crore, Ebitda Rs 337.8 crore, and adjusted net profit Rs 163.6 crore.

 

Sagility India said Q3 results saw robust year-on-year growth, largely fueled by the existing clients and logos that were on boarded the last couple of years.

 

"Our tech and transformation led services utilising automation, analytics, and GenAI — has substantially strengthened our client relationships and positioned us as a trusted strategic and advisory partner. This shift has been pivotal in driving growth and elevating our market perception amongst clients," it said in its investor presentation.

 

For the nine months ended December 31, 2024, revenue stood at Rs  4,001.4 crore, up 15.3 per cent Y-o-Y (13.9 per cent in constant currency) from Rs 3,470.4 crore.

 

Adjusted Ebitda was Rs 1,110.4 crore for the period, higher by 30.2 per cent Y-o-Y from Rs 852.7 crore, while adjusted PAT was Rs 570.9 crore, which clocked a jump of 34.5 per cent Y-o-Y from Rs 424.5 crore.

 

"In addition to sound Operating performance, our exceptional margins in this quarter were driven by favorable foreign exchange movements, higher operating margins due to open enrollment, and higher other income," said Sarvabhouman Srinivasan, group chief financial officer.

 

Sagility India Limited is one of the leading global providers of technology-enabled business solutions and services to clients in the US healthcare Industry.  Sagility India had launched its initial public offering (IPO) on November 5, 2024, which concluded on November 7, 2024.   Master Capital Service had recommended to subscribe to the IPO for long-term gains. They highlighted that US healthcare spending grew at a 3.2 per cent CAGR from 2014 to 2023, reaching $201.1 billion in 2023, and is expected to rise at a 5.2 per cent CAGR, reaching $258.9 billion by 2028.  "The industry's complex regulations and compliance requirements present opportunities for specialised service providers like Sagility India, which has strong relationships across healthcare payers and providers," it had said.

 

It closed the acquisition of BroadPath Healthcare Solutions on January 29, 2025, giving it access to a large National payor and more than 30 other new mid-market payor clients.

 

BroadPath services portfolio includes member engagement, member acquisition, claims and appeals administration, provider enrolment and credentialing.

 

Listing the financial synergies from the acquisition, Sagility India said BroadPath would improve the company's efficiency by scaling Sagility’s onshore operations. It would reduce combined administrative costs, and increase sales efficiency and resource utilisation.

 

According to the management, the acquisition of BroadPath strengthens their growth strategy and enhances the business mix. Their emphasis, they said, will remain on driving efficiencies from the application of technology, AI, and domain expertise.

 

"BroadPath is Arizona-based health tech provider. Sagility's M&A strategy is aligned to either addition of capabilities or addition of a large client base and BroadPath fits in the second category with the addition of mid-market clients to Sagility's client portfolio. Bhive is BroadPath's remote work platform which is its key offering, (it saw huge volume surge during Covid). This acquisition is EPS accretive with entire funding done through internal accruals," said analysts at ICICI Securities.

 

The brokerage has raised FY25 EPS by 24 per cent, factoring in BroadPath's revenues worth 2 months in December and FY26-27 EPS by 2-4 per cent on better growth estimates.

 

Sagility India share price target has been raised to Rs 57 (from Rs 55). IT has maintained its 'ADD' rating on the stock on strong execution, US healthcare industry tailwinds, and synergistic acquisitions (DCI, Birch AI and BoradPath).