The IPO of Sagility India is entirely an offer-for-sale (OFS) sale of up 70.22 crore equity shares by its promoter Sagility BV amounting to Rs 2,106.6 crore.
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The initial public offering (IPO) of Sagility India opened for bidding on Tuesday, November 5 and can be subscribed till Thursday, November 7. The healthcare solutions provider shall be selling its shares in the range of Rs 28-30 apiece, for which investor can apply for a minimum of 500 equity shares and its multiples thereafter.
Sagility India, formerly known as Berkmeer India, provides healthcare-focused solutions and services to payers (US health insurers who fund and reimburse the cost of healthcare services) and providers (primarily hospitals, physicians, diagnostics and medical technology companies). It supports the core business of both payers and providers.
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The Rs 2,106.60 crore IPO of Sagility India is entirely an offer-for-sale (OFS) sale of up to 70.22 crore equity shares by its promoter Sagility BV. The company will not receive any proceeds from the issue. Sagility India has reserved 1,9,00,000 shares worth Rs 5.70 crore for the eligible employees of the company, who will get a discount of Rs 2 apiece.
Bengaluru-based Sagility India raised Rs 945.4 crore from 52 anchor investors ahead of its IPO launch. Anchor book included names like Nomura Funds, Government Pension Fund Global, Florida Retirement System, TIMF Holdings, Societe Generale, Goldman Sachs, ICICI Prudential MF, HDFC MF, Mirae Asset, ICICI Prudential Life, Whiteoak Capital, PGIM India and more.
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Sagility India’s services to payers span their entire operational spectrum, including centralized claims administration and clinical services functions. It also offers some of the services it provides to payers to pharmacy benefit managers (PBMs) who manage prescription drug coverage for members under health benefit plans.
All customers of Sagility India are based in the USA. The company’s five largest customer groups had an average tenure of service of 17 years as of March 31, 2024. In January 2024, the company served five of the ten largest players in the US. In addition, the company acquired 20 new customers in the financial years 2024 and 2023.
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Sagility India reported a net profit of Rs 22.29 crore with a revenue of Rs 1,257.76 crore for the quarter ended on June 30, 2024. It clocked a net profit of Rs 228.27 crore with a revenue of Rs 4,781.5 crore for FY24. It has reserved 75 per cent of the net for the qualified institutional bidders (QIBs), 15 per cent for non-institutional investors (NIIs) and 10 per cent for Retail investors.
ICICI Securities, Jefferies India, IIFL Securities and JP Morgan India are the book running lead managers of the Sagility India IPO, while Link Intime India is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE, with November 12, Tuesday as the date of listing. Here’s what a host brokerage firms said about the IPO of Sagility India:
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Marwadi Financial Services
Rating: Subscribe
Considering the TTM-June 24 EPS of Rs 0.44 on a post-issue basis, the company is set to list at a P/E of 68 times with a market cap of Rs 14,043.99 crore, said Marwadi Financial Services. “We assign ‘subscribe’ rating to this IPO as the company is the leader in the large and resilient US Payer and Provider solutions market. Also, it is available at reasonable valuation on an absolute basis,” it added.
Arihant Capital Markets
Rating: Subscribe with caution
Sagility’s focus on technology and automation, including tools like AI-driven clinical support and payment integrity systems, positions it well to handle rising healthcare demands and regulatory complexities in the US With support from its sponsor EQT, it plans to grow through both organic expansions and acquisitions, aiming to enhance its service offerings and add new clients, said Arihant Capital.
“At the upper band of Rs 30, the issue is valued at a P/E ratio of 61.52 times, based on a FY24 EPS of Rs 0.49. We are recommending a “Subscribe” rating for high risk investors for this issue,” it said.
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StoxBox
Rating: Subscribe
Sagility India has become one of the largest tech-enabled healthcare specialists (by revenue) with coverage across payer and provider markets. As of June 30, 2024, its five largest client groups had an average tenure of 17 years with the business. The company served five of the top 10 Payers by enrollment in the US financially, said StoxBox.
“The company reported 23.5 per cent and 17.8 per cent Ebitda margins for FY24 and the quarter ending June 30, 2024, respectively. The issue is valued at a P/E of 56.6 times on the upper price band based on FY24 earnings, which is deemed fair. Therefore, we recommend a ‘subscribe’ rating for the issue,” it added.
Canara Bank Securities
Rating: Subscribe for long term
Sagility focuses on tech-enabled solutions for US payers, offering services like claims management, invoicing, and payment processing, and is well-positioned to capture market share in the underpenetrated healthcare outsourcing segment. It served top US healthcare payers by enrollment, with a growing client base and service scope as of June 2024, said Canara Bank Securities.
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“This issue is available at P/E of 56.60 times and 15 times of FY24 and Q1FY25. Annualized P/E of FY2025E appears aggressively priced. Despite this, Sagility’s strong technological offerings, stable revenue growth, and established client relationships position it as a promising long-term investment opportunity in the healthcare market,” it said with a ‘subscribe for long term’ rating.
Master Capital Services
Rating: Subscribe for long term
Sagility India Limited is one of the leading tech-enabled healthcare specialists with comprehensive coverage across healthcare payer and provider markets. The company’s deep, long-term, expanding client relationships across healthcare payers and providers assist in high client stickiness and retention, said Master Capital, suggesting Investors to in the IPO for the long term.
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SBI Securities
Rating: Avoid
Sagility India is valued at FY24 P/E multiple of 56.3 times based on the upper price band on the post-issue capital. Sagility possesses robust domain experience in the US healthcare industry which has helped to maintain long-term relations for healthcare payers and providers, said SBI Securities.
“The company operates a unique business model and does not have any like-to-like comparable listed peers globally as well as domestically. However, looking at the steep valuation at which business is offered to investors and its dependency on Top 10 clients (91.2 per cent of Q1FY25 revenue), it is advisable to avoid the issue,” it said.
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Bajaj Broking
Rating: Subscribe for long term
Sagility supports the primary operations of both payers and providers. For Payers, services cover the entire operational spectrum, including centralized claims administration and clinical services functions such as claims processing, payment integrity, and clinical management, said Bajaj Broking.
“It extends some of its services for payers to pharmacy benefit managers (PBMs), who handle prescription drug coverage for insured members under health benefit plans. As of March 31, 2024, the company’s five largest customer groups had an average service tenure of 17 years,” it said with a subscribe for long term’ tag.
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Swastika Investmart
Rating: Avoid
Sagility India is exclusively focused on the US healthcare market. US presidential election outcomes could affect its operations. Its valuation appears high, with no direct peers for comparison, while the IPO is a complete offer for sale, said Swastika Investmart. “Current market conditions may impact subscription and listing performance. Investors may consider skipping this IPO,” it said.
