Sagility Shares Continue To Rally; Up 75% Since Listing

Shares of Sagility India Ltd. rose as much as 5% on Thursday and were briefly locked in the upper circuit for the second time this week. The rally in the recently listed healthcare services provider is expected to continue, with analysts anticipating a temporary setback in February when the second lock-in period for anchor investors ends.

Top global brokerages, including Jefferies Equity Research and JP Morgan, have initiated coverage on the stock in recent weeks, maintaining a bullish outlook. They foresee double-digit revenue growth driven by structural tailwinds and deep domain expertise, which are expected to sustain the stock's upward momentum.

Since its debut on Dalal Street on Nov. 12, Sagility shares have surged nearly 75% from their issue price, overcoming a muted listing to deliver stellar gains.

Jefferies: 'Buy' Rating with 19% Upside

The brokerage initiated coverage on Sagility, highlighting its strong positioning as a US-focused business process management firm with significant domain expertise. The brokerage assigned a 'buy' rating with a price target of Rs 43.58, indicating a ~ 19% upside.

Jefferies expects Sagility to deliver double-digit revenue growth, driven by its technology-enabled BPM services catering to the US healthcare sector. The company serves five of the top 10 US healthcare payers by enrolment as of January 2024 and operates with over 38,000 employees across the US, Colombia, Jamaica, the Philippines, and India.

JP Morgan: 'Overweight' with 16% Upside

The brokerage initiated coverage on Sagility with an 'overweight' rating and a price target of Rs 54 per share, up from Rs 46.6. The brokerage cited structural tailwinds and the company's deep domain expertise.

JP Morgan noted that Sagility stands to benefit from increased outsourcing in US healthcare operations, where outsourcing penetration remains low at 22%. With non-discretionary spending driving revenue growth, the company is expected to outperform larger IT and BPO peers, growing at an estimated 15% compared to the underlying market's 5% growth. The firm’s strong client relationships and focus on account mining are additional factors expected to fuel its growth trajectory in the coming quarters.

Sagility India stock rose as much as 4.99% during the day to Rs 51.37 apiece on the NSE. Shares were locked in the upper circuit, compared to a 0.30% advance in the benchmark Nifty 50 as of 10 a.m. 

It has risen 75.20% in the last 12 months. The total traded volume so far in the day stood at 2.9 times its 30-day average. The relative strength index was at 84.56, indicating that the stock may be overbought.

The two analysts tracking the stock have a 'buy' rating on it, according to Bloomberg data. The 12-month analysts' consensus target price on the stock is Rs 53, implying an upside of 3.8%.