Sagility shares make muted debut, list at ₹31.06, a premium of just 3.53% from IPO price

Sagility India IPO listing: Shares of Sagility India made a muted debut on the bourses on Tuesday, November 12 as they listed at ₹31.06 on NSE and BSE, a premium of 3.53 percent to the issue price of ₹30.

The initial public offering (IPO), valued at ₹2,106.60 crore, was open for subscription from November 5 to November 7. The public offer was priced in the range of ₹28-30 per share.

Following the three days of bidding, Sagility IPO closed with robust demand, garnering 3.2 times bids. The IPO received bids for 123.99 crore shares against 38.7 crore shares on offer. The retail investor segment was booked 4.16 times, while the non-institutional investors (NII) category saw a subscription of 1.93 times. The qualified institutional buyers (QIB) portion was also fully subscribed, with 3.52 times bids. Finally, the employee quota was bid 3.75 times.

About the IPO

Sagility IPO was entirely an offer for sale (OFS) of 70.22 crore shares with no fresh issue component. Post the issue, promoter shareholding in the company will be reduced to 82.5 per cent. The company raised ₹945.40 crore from anchor investors on November 4, 2024. Retail investors could apply with a minimum lot size of 500 shares, requiring a minimum investment of ₹15,000.

Sagility India will not get any proceeds from the initial share sale. The primary objectives of the Offer include gaining the advantages associated with listing the equity shares on stock exchanges and facilitating the Offer for Sale, which involves up to 702,199,262 equity shares with a face value of Rs. 10 each, being sold by the Promoter Selling Shareholder.

The issue includes a reservation of up to 1,900,000 shares for employees offered at a discount of ₹2 to the issue price.

ICICI Securities Limited, IIFL Securities Ltd, Jefferies India Private Limited and J.P. Morgan India Private Limited are the book running lead managers of the Sagility India IPO, while Link Intime India Private Ltd is the registrar for the issue.

Brokerage Views

Brokerages are most positive on the issue and suggested subscribing to it for a long term.

Master Capital Service advised investors to subscribe to the IPO for long-term benefits. They pointed out that U.S. healthcare spending increased at a 3.2 percent CAGR from 2014 to 2023, reaching $201.1 billion in 2023, and is projected to grow at a 5.2 percent CAGR to $258.9 billion by 2028. The sector’s intricate regulations and compliance demands create opportunities for specialized service providers like Sagility India, which maintains robust relationships with healthcare payers and providers.

Bajaj Broking similarly recommended subscribing for long-term investment. They highlighted that Sagility India posted an average EPS of ₹0.37 and a RoNW of 2.52 percent over the last three fiscal years. While the IPO is priced at a P/BV of 1.85, Bajaj Broking cautioned that it appears to be aggressively priced at a P/E of 157.89 based on projected FY25 earnings.

About the Company

Sagility India Limited, previously known as Berkmeer India Private Limited, specializes in providing healthcare-focused solutions and services to both Payers (U.S. health insurers who finance and reimburse healthcare costs) and Providers (such as hospitals, physicians, diagnostics, and medical technology firms). The company supports the essential operations of both sectors.

For Payers, it covers a comprehensive range of services, including centralized claims administration, clinical services, payment integrity, and clinical management. For Providers, Sagility offers revenue cycle management services to facilitate billing and cost recovery from Payers. Additionally, some of its services are extended to Pharmacy Benefit Managers (PBMs), who oversee prescription drug coverage for insured members under health benefit plans.

Earnings: The company reported revenue from operations of ₹4,753 crore for the financial year 2023-24, marking a 12.6 percent increase from ₹4,218 crore in the prior fiscal year. The profit after tax (PAT) saw a significant rise of 59 percent, reaching ₹228.2 crore in FY24, compared to ₹143.5 crore in FY23. In the first quarter of FY25, the company recorded revenue of ₹1,223 crore and a net profit of ₹22.2 crore.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.