The brokerage has initiated coverage on Sagility with a “buy” rating and a target price of ₹60. This implies an upside of 39.2% from its previous closing price.
Nuvama said healthcare business process management (BPM) is entering an era of AI-led transformation with US healthcare offering a large and underpenetrated outsourcing opportunity. The US healthcare operations spend is anticipated to climb up to $259 billion by the calendar year 2028 from $201 billion in the calendar year 2023, as per Nuvama.
Outsourced spend is likely to outpace in-house operations, the brokerage said.
Nuvama values Sagility at 18 times its estimated FY28-29 average earnings per share (EPS). The company has multiple avenues for cross-sell and account expansion, the note added further.
The brokerage said that free cash flow generation and debt repayment should strengthen Sagility’s balance sheet. It expects Sagility to turn into a net cash company by the ongoing financial year.
Nuvama also expects Sagility’s revenue in US Dollar terms to grow at a Compounded Annual Growth Rate (CAGR) of 13% over financial year 2026-2029, while its adjusted EPS could grow at a 19% CAGR over the same timeframe. EBITDA margins of the company can sustain between 24% to 25%.
On another note, last month, Sagility Group CEO and MD Ramesh Gopalan told CNBC-TV18 that pressure on US healthcare payers remained high and the pressure continued to drive demand for outsourcing the firm’s way.
Gopalan also reaffirmed the company’s entire year guidance of low double-digit organic growth for FY27, citing strong visibility in the third quarter, despite continued uncertainty around the last quarter of this fiscal.
Sagility shares gained 2.2% to hit an intraday high of ₹44.04 apiece on Thursday. The stock though has given up some of those gains, currently trading 0.9% higher at ₹43.47. The stock is down 17% so far this year.
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