The international brokerage house, Nomura, has initiated coverage on Sagility India with a ‘Buy’ rating. The stock got listed in November 2024. In the last 6 months it has fallen 9% and in the past 1 year, this stock, exclusively focused on the US healthcare market, has declined nearly 8%.
But Nomura believes Sagility India can rally almost 47% from current levels, and they have set a target of Rs 55 per share for the stock. What’s fuelling the bullish prediction? Here’s a detailed analysis-
Pure-play healthcare focus
The company generates almost 90% of its revenue from US health insurance payers, with the remaining 10% coming from healthcare providers like hospitals and diagnostic companies.
“The company is vertically integrated with operational flexibility (distributed workforce model) and deep healthcare domain knowledge to deliver superior solutions for all stakeholders, in our view,” said the brokerage house.
Strong growth outlook
Owing to margin pressure, there is an increase in the US healthcare outsourcing market, which becomes Sagility India’s main growth driver. The brokerage firm expects the company to deliver a healthy revenue CAGR of 12% and an EPS CAGR of 20% between FY26 and FY28, driven by lower interest costs and sustained demand.
Macro tailwinds driving outsourcing
Also, the increased margin pressures on US insurance companies, caused by Medicaid funding cuts and Medical Loss Ratio (MLR) rules, are forcing them to adopt digital and AI-led operating models. This shift is expected to act as a significant tailwind for Sagility India as payers increasingly outsource non-core administrative and clinical tasks.
The US healthcare payer industry demonstrates significant market concentration, with the leading 10 payers controlling approximately 60% of total market share based on direct written premiums.
Strategic beneficiary of AI
While AI is expected to automate simple queries, Nomura believes Sagility India’s engagement services (30% of revenue) will remain resilient because complex clinical decisions still require human involvement due to regulatory constraints.
Furthermore, tools like “Agent Assist” are expected to significantly boost internal efficiency, though much of these gains may be passed back to clients to maintain stable medium-term margins.
Exceptional client retention and stability
As of Q3 FY26, the company served 81 client groups with an average client tenure of 18 years and a 95% retention rate. This stability is being boosted by strategic acquisitions, such as BroadPath, which expanded Sagility India’s reach into the mid-market payer segment.
Sagility India share price performance
The share price of Sagility India has surged 5.3% in the last five trading sessions. However, the stock has dropped 6.8% in the previous one month and 9% over the last six months. Sagility India’s stock price has declined over 8% since its listing date
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.