Sagility India's PAT Growth To Be Fuelled By Debt Reduction Over Next Three Years: Group CEO

Reduced debt levels will help Sagility India grow its profit after tax numbers at a much higher rate than its revenues and Ebitda over the next three years, its Managing Director and Group Chief Executive Officer Ramesh Gopalan said.

Sagility India posted strong quarterly results, with revenue rising 15.3% year-on-year to Rs 1,453 crore. This was led by a robust 50.8% increase in Ebitda to Rs 392 crore, leading to a net profit surge of over three times, at Rs 217 crore for Q3. Adjusted Ebitda margins jumped substantially to 31.4% in Q3, up from 21.7% in the same quarter a year ago.

Talking to NDTV Profit, Gopalan said PAT growth over the next three years would be “much higher”.

“Our debt levels are continuing to come down. So that's one of the reasons PAT growth will be much higher than the revenue and Ebitda growth,” he said.

The open enrollment season in the US health insurance segment will continue to have a positive impact on Sagility’s numbers in fourth quarter, the top executive explained, adding the company will achieve low to mid-teens growth.

“The open enrollment continues in the early part of Q4. So there is some impact of it. We will continue to achieve the broad guidance we have given for the year, which is low to mid-teens growth,” he said.

Explaining the reasons behind the strong Q3 performance, Gopalan said the company has been performing well organically.

“There were a couple of reasons. One, organically, we've been doing very well. Over the last several quarters, we've been growing across our client portfolio, and that growth largely continued in this quarter as well,” he said.

The seasonality factor also kicked in during Q3 for Sagility India, driving its numbers.

“There is a seasonal spike to the business in the second half of the year. The second half is typically what's called the open enrollment season in the US healthcare segment, when people renew their insurance. That's the time our clients expect us to handle more volumes," Gopalan said.

The tailwind in forex helped the company maintain its margins, he mentioned.

“On the margin front, the additional tailwind we had was also from Forex. The currency in a couple of our geographies depreciated against the US dollar. Since all our revenues are in the US healthcare segment, the tailwind in the forex also helped our margins,” the Sagility India MD said.

Shares of Sagility India Ltd. rose sharply during Thursday’s trade on the NSE, following its strong Q3 results. The shares were locked in the upper circuit of 5% at Rs 52.73 apiece at 10:59 a.m., while benchmark Nifty 50 was down 0.5% at 23,399.2 points at around 11:53 a.m.