A newly listed healthcare IPO is making buzz in the BPO space. Top brokerage firms are very optimistic about its growth potential. With a growth trajectory and business model riding on the USD 4.8 trillion (~INR 418.58 lakh crore) US healthcare market, this company is fast becoming a favourite among investors.
Analysts are seeing a 7-12% CAGR growth in outsourced healthcare operations. Companies with deep domain expertise, operational efficiency and strong client relationships are emerging as the biggest winners. Let’s uncover the suspense:
We are talking about Sagility India, JM Financial has initiated coverage on it and provided a BUY rating with a target price of INR 67 per share (implying 61% upside) from current levels. The brokerage is impressed with their strong fundamentals, robust revenue visibility and increasing market share in the payer segment of US healthcare outsourcing. This comes at a time when the Healthcare BPO space is seeing a high level of consolidation with M&A and private equity backed roll-ups.
The Big Picture
The US healthcare industry is a huge market for specialized outsourcing players. The Total Addressable Market (TAM) for Healthcare BPOs is USD 200 billion (~INR 17.44 lakh crore). The space is dominated by two primary segments:
- Payers (federal, state and private insurers) – USD 138 billion
- Providers (hospitals, physician groups etc.) – USD 63 billion
Outsourcing penetration is currently at 20-24%, similar to IT services. JM Financial believes the real growth driver will be market share expansion and industry consolidation rather than penetration increases alone.
Sagility India – Overview
Sagility India is strategically positioned at the intersection of BPO services and the US healthcare vertical, a niche that demands deep domain expertise and compliance-driven execution. The company derives 90% of its revenue from payers and 10% from providers, indexing it well to overall industry growth.
Key factors supporting Sagility’s valuation include:
- Strong client relationships – works with 5 out of the top 10 US payers
- Scale advantage – LTM revenue of USD 632 million (~5,510.26 crore)
- Healthy margins – 22% EBITDA margin (9MFY25)
- Operational efficiency – lower amortization and interest expenses driving EPS growth
- Double-digit growth aspirations through expansion into mid-market payers and providers
JM Financial projects a 54% EPS CAGR over FY24 -27E, valuing the company at 35x forward earnings (1x PEG ratio). The valuation is supported by a reverse Discounted Cash Flow (DCF) analysis, reinforcing Sagility’s growth trajectory.
Sagility India launched its IPO on 5 November 2024, the issue was subscribed 3 times. Sagility India IPO was listed in negative territory with a minor loss of 2.32%. However, the IPO picked momentum later and reached its all-time high of INR 53.86 per share (a promising return of 79%). The shares of Sagility India are trading 22% below its highest, and brokerage houses are positive about its future.
Sagility’s listing has drawn the attention of multiple brokerages, with varying degrees of optimism:
| Brokerage House | Rating | Target Price (INR) | Upside from CMP (%) |
|---|---|---|---|
| Jefferies | BUY | 71 | 69 |
| JM Financial | BUY | 67 | 60 |
| Axis Capital | BUY | 60 | 43 |
| JP Morgan | HOLD | 54 | 29 |
While valuations differ, the broader Street consensus remains positive on Sagility’s growth trajectory. The company is seen as a leader in the healthcare BPO space, benefiting from operational efficiency, strategic acquisitions, and growing offshore demand.
Final Thoughts
The Healthcare BPO sector is fast approaching a tipping point. Rising operational costs, regulatory complexities, and a persistent shortage of medical staff in the US are all fueling the demand for outsourced healthcare services. With a consolidation wave underway, the market is shifting toward scale players with strong domain expertise and cost advantages.
Sagility, with its payer-dominated revenue base and operational efficiencies, is well-positioned to capitalize on this trend. While risks such as regulatory changes in US healthcare policies remain, the company’s growth potential and profitability metrics make it a compelling stock to watch.
For investors, JM Financial’s bullish stance on Sagility, along with endorsements from Jefferies and Axis Capital, suggests that the market is waking up to this high-growth play. If Sagility delivers on its ambitious EPS projections, the stock could emerge as a breakout winner in the listed BPO space.
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