Is Sagility India IPO Good or Bad - Detailed Review

Sagility India Limited is kicking off its initial public offering which will be open from November 5, 2024, to November 7, 2024. While considering applying for this IPO, certain questions may arise in your mind, some of which include whether Sagility India IPO is good or bad, whether it is worth investing in Sagility India IPO, and so on. In this article, we will cover a few details about Sagility India's IPO to better analyze its IPO.

Sagility India IPO - Company Overview

Sagility India Limited, formerly known as Berkmeer India Private Limited, was incorporated in 2022. The company is a pure-play healthcare-focused services provider catering to clients in the U.S. healthcare industry.

The company provides technology-enabled business solutions and services to Payers  (U.S. health insurance companies, which finance and reimburse the cost of health services) and Providers (primarily hospitals, physicians, and diagnostic and medical devices companies).

For Payers, the company provides services relating to their operations which include (i) core benefits administration functions such as claims management, enrolment, benefits plan building, premium billing, credentialing, and provider data management and (ii) clinical functions such as utilization management, care management, and population health management

On the Provider side, the company’s services include revenue cycle management functions such as financial clearance, medical coding, billing, and accounts receivable follow-up services. 

Furthermore, Sagility also provides some of the services that it provides to Payers to pharmacy benefit managers (“PBMs”) that manage prescription drugs for Members (i.e., insured persons) under health insurance plans.

The company uses a multi-shore service delivery model with 31 locations in five countries which include the U.S., Colombia, Jamaica, India, and the Philippines, as of June 30, 2024. The customer contracts are serviced by its employees from these locations and are executed by the subsidiaries in the U.S.

All clients are based in the U.S., and as of June 30, 2024, the company has established long-standing relationships, with its five largest client groups averaging 17 years of partnership. Furthermore, the company has served five of the top 10 Payers by enrolment in the U.S. and has added 22 new clients between FY23 to Q1FY25.

Sagility India IPO - Financial Overview

As the company was incorporated in 2022, we only have enough data to analyse the financials of FY23 and FY23. The table below shows the key financial and operating metrics for the company’s business segments for the periods indicated:

Source: RHP of the company

Talking briefly about the company’s business, we can see that the company has increased its total clients from 35 in FY23 to 44 in FY24. Furthermore, the company has also added 13 new clients during FY24.

When it comes to its revenue from operations, the company has earned Rs.4,753.55 crores in FY24 compared to Rs.4,218.40 crores in FY23. Similarly, its adjusted EBITDA has increased from  Rs.1044.86 crores in FY23 to Rs.1,171.46 crores in FY24.

Overall, the company has reported an adjusted PAT of Rs. 589.55 crores in FY24 compared to Rs.455,59 reported in FY23. During FY24, the company was able to retain an adjusted PAT margin of 12.40%.

While the company has strong financial performance, it should be noted that, out of the total revenue generated, the company derived Rs.3762.76 crores from its five largest clients in FY24. This creates a considerable concentration risk in the company's client portfolio.

Sagility India IPO - Industry Overview 

Healthcare expenditure in the U.S. has increased from 2014 to 2023 at a CAGR of 5.0%, amounting to 4.7 trillion dollars (Rs.389.6 lakh crores) in 2023. The expenditures are further expected to grow at a CAGR of 5.5%, reaching 6.1 trillion dollars (Rs.509.8 lakh crores) by 2028. 

The healthcare market in the U.S. comprises two primary entities for managing care financing and care delivery. These include the healthcare payers and healthcare providers. The healthcare payers are those entities that pay for or reimburse healthcare services for insured members through health insurance plans. The healthcare providers are individuals or healthcare facilities licensed to deliver care services or aid in care delivery such as doctors, clinics, hospitals, labs, and durable medical equipment providers. 

As of 2023, the healthcare operations spending in the US by the payers and providers was valued at approximately $201.1 billion Rs.16.8 lakh crores. This spending is further expected to increase to 258.9 billion dollars (Rs.21.6 lakh crores) in 2028 which will be driven by the rise in the aging population, increasing prevalence of chronic diseases, and various governmental initiatives aimed at enhancing healthcare services, among other factors.

Sagility India IPO - Peer Comparison

Given the company’s exclusive focus on healthcare in the payer and provider markets, there are no listed service providers in India or abroad that serve U.S. healthcare enterprises and are comparable in size and business model. As a result, it is not possible to compare the company’s accounting ratios with those of any other listed entity.

However, it should be noted that Sagility India does face competition from companies that provide similar services in the same markets, some of which may have financial, marketing, technical, and other advantages. Furthermore, Large technology companies with substantial resources and technical expertise could also further expand in the healthcare services market where the company operates.

Sagility India IPO- Objective of the IPO

Sagility India Limited is conducting its IPO entirely through offer-for-sale. This means the company will not receive any proceeds from the IPO and the entire proceeds will go to the selling shareholders of the company.

Additionally, the company aims to gain the benefit of listing its Equity Shares on the Stock Exchanges, thereby enhancing its visibility and brand image.

Sagility India IPO Details

Sagility India IPO Date

Sagility India IPO is open to subscription from November 05, 2024, to November 07, 2024. The shares will be allocated to investors on November 08, 2024, and the company will be listed in the NSE and BSE on November 11, 2024.

Sagility India IPO Issue Price

Sagility India is offering its shares in the price band of Rs.28 to Rs.30 apiece. This means you would require an investment of Rs.15,000 per lot (500 shares) if you are bidding for the IPO at the upper price band.

Sagility India IPO Size

The company is offering a total of 702,199,262 shares, amounting to Rs.2,106.60 Crores. This IPO offering of Sagility India Limited is entirely conducted through an offer for sale. 

Sagility India IPO GMP

Many investors look at the Grey Market Premium (GMP) before applying for the Sagility India IPO. The GMP gives an idea of market sentiment and can hint at the possible listing price. However, it should be noted that it does not reflect how financially strong Sagility India Limited is. Thus, it is important to analyze the details of Sagility India before investing in it.

Sagility India IPO Allotment Status

The shares from the Sagility India IPO will be allotted to its investors on November 8, 2024. One can check the allotment status for Sagility India IPO from its registrar Link Intime India Private Limited, the BSE website, or your broking platform where you have applied for the Afcons Infrastructure IPO.

Sagility India IPO Application Link

Open a demat account with Rupeezy today and enjoy a seamless experience when applying for the IPO. With an easy-to-use platform, Rupeezy makes the IPO application process quick and hassle-free. Click on the apply link below to get started.

Apply for Sagility India IPO

Is Sagility India IPO a Good or Bad Investment? Final Thoughts

Sagility India IPO Review: Sagility India shows promising financial performance with strong revenue growth and healthy profit margins. However, there are several factors one needs to consider while participating in the IPO. 

Some of these include limited historical data for analysis, no comparable listed companies of similar size or business model for effective valuation, concentration risk, as a large portion of revenue relies on just five major clients, and currency fluctuation risk as the company does its business in the U.S.

Therefore,  investors should conduct thorough research and carefully consider their risk tolerance before investing in this IPO.

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