Sagility’s Chirok Health Acquisition can boost its stock price by 31%, JPMorgan says

Sagility shares can rise 30.6% as per global investment banking firm JPMorgan’s latest note on Thursday, October 22.

JPMorgan has a “buy” rating on the stock and a target price of ₹58 per share, indicating an upside of 30.8% from current levels.

The investment banking firm said Sagility announced the acquisition of Chirok Health, a US-based healthcare services company catering to providers segment. it provides clinical documentation integrity, medical coding, revenue cycle management and audit and quality assurance services.

Sagility is currently under-indexed to the providers segment and hence the Chirok acquisition helps it expand its providers portfolio and even though it is only 1% of its overall revenues, it is 10% of its providers revenue, JPMorgan said.

JPMorgan believes expanding into the providers segment is a right strategy given outsourcing underpenetration that provides a bigger total addressable market (TAM) to tap as well as higher margins.

Sagility is acquiring Chirok at an enterprise value (EV) of $32.3 million implying EV/revenue of 3.6x, higher than the 0.8x it paid for Broadpath. However, JPMorgan believes its EV/EBITDA multiple could be 10x, compared to  Broadpath’s 8x, as the estimated EBITDA margins for Chirok are predicted to be higher at 35%, compared to Broadpath’s 10% to 15% range.

The acquisition should add 0.6% and 1% to its FY27 and FY28 revenues, respectively, and JPMorgan estimates the transaction to be margin accretive as well.

All 14 analysts who have coverage on the Sagility stock have “buy” recommendations.

Shares of Sagility are trading 1.5% higher on Thursday at ₹45.07. The company will be reporting its second quarter results today.

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