Buy Sagility; target of Rs 60: Prabhudas Lilladher

Moneycontrol • 9 days ago

Original source

Key Investment Pillars

  • Sagility's strong margin performance, with adj. EBITDA margin of 26.3%, was driven by operational efficiencies and FX tailwinds, beating estimates.
  • The company's revenue growth of 12.2% YoY CC was below estimates, but remained steady, driven by expansion within national payers and mid-market clients.
  • Deal wins remained healthy, with ACV rising 18.2% YoY to US$40.2mn, and AI traction continues to improve, with new SOW wins and more solutions entering production.
  • The integration of CareSeed is complete, and the Chirok Health acquisition strengthens mid-revenue cycle capabilities, creating cross-selling opportunities.

Thesis Validation Checklist

  • Over the next 12 months, investors should watch for signs of steady revenue growth, driven by expansion within national payers and mid-market clients, as well as continued strong margin performance.
  • The company's ability to deliver on its low double-digit organic growth guidance and maintain its adj. EBITDA margin range of 25-26% will be key to validating the investment thesis.
  • Additionally, investors should monitor the progress of AI-led solutions and the integration of Chirok Health, as these are expected to drive long-term growth and margin expansion.