Sagility shares surge 8%; brokerages retain 'Buy' despite Q1 revenue dip QoQ; check target prices

Shares of Sagility India Ltd surged 8.26 per cent in Monday's trade to hit a high of Rs 43.80. Select domestic brokerages retained their 'Buy' ratings on the healthcare-focused BPM firm despite a sequential decline in June quarter revenue.

Elara Capital said, "In Q1, Sagility's reported revenue was down 6.4 per cent QoQ (up 15 per cent YoY) but adjusted to seasonal revenue bump-up in Q4 FY26, it was up 5 per cent QoQ. SAGILITY maintains that it expects similar seasonality to play out this year – i.e., H2 revenues will be higher than H1."

It noted that the top-10 health insurers in the US continue to face cost pressures and are increasingly looking at outsourcing opportunities. Sagility currently works with seven of the top 10 insurers and is pursuing business from the remaining players.

The brokerage also highlighted improving client diversification. The top three, top five and top 10 clients contributed 60 per cent, 70 per cent and 84 per cent of Q1 FY27 revenue, respectively, compared with 72 per cent, 81 per cent and 91 per cent in FY23.

Elara further said Sagility's acquisition of CareSeed, a tuck-in acquisition with annual revenue of around $5 million, would strengthen its capabilities in Healthcare Effectiveness Data and Information Set (HEDIS) reporting. It also noted that the company maintained its FY27 adjusted EBITDA margin guidance of 24-25 per cent.

The brokerage retained its 'Buy' rating and raised its target price to Rs 58.

Meanwhile, Mirae Asset Sharekhan said the QoQ revenue decline was due to the absence of the open enrollment (OE) period.

"Removing the sequential bump due to OE, revenue grew 5.1 per cent QoQ," it said.

"We maintain a positive view on Sagility despite modestly lowering our EPS estimates to factor in the 120 bps margin impact from recent minimum wage hikes. With management reiterating its FY27 growth and margin guidance, strong deal momentum, and exposure to the largely non-discretionary healthcare operations market, we continue to remain constructive on the stock's medium-term growth outlook," Sharekhan also said.

The brokerage reduced its FY28 earnings estimate but maintained its 'Buy' rating with a revised target price of Rs 52.