If there is one sector that has been continuously losing out on foreign investments, it has to be Information Technology (IT). For the entire 2025, foreign institutional investors (FIIs) continued to dump IT stocks. In fact, in the October-December quarter alone, FIIs sold (net) IT stocks worth ₹6,862 crore. (Source: NSDL)
Having said that, there is one technology stock that both institutional investors, domestic and foreign, are buying at an astounding pace.
And that stock is Sagility Limited.
During Q3FY26, FIIs raised their stake by 4.7% points while DIIs increased their stake by 6.5% points, taking the total holding to 10.3% and 21.4% respectively. The combined increase in holdings in Q3 alone was over 11% points.
This robust increase in stake is quite eye-catching, especially given the overall sentiment around tech stocks. So, let’s find out what worked in favour of Sagility and why it has been drawing such immense attention from institutional investors.
Sagility Limited: Bridging the Gap Between Payers and Providers
The healthcare sector has been adopting technology and AI-led innovation rapidly, and Sagility stands at that intersection. The company offers healthcare-focused business process management (BPM) services along with tech-enabled services to healthcare insurers (payers) and healthcare providers in the United States.
For healthcare insurers (payers), Sagility offers claims management services, audit services for payments, and assists in onboarding healthcare providers with the insurers.
On the other hand, for the healthcare providers, Sagility offers revenue cycle management, which includes the entire insurance processing and patient engagement services as well.
A 36% Revenue Boom
Healthcare spending is increasing in the US. It grew by 7.2% in 2024 (as per CMS), and this, in turn, is pushing healthcare outsourcing demand upward. Sagility is well-positioned to reap the benefits.
During Q3FY26, the company witnessed a solid 36% jump in its revenue on a year-on-year (YoY) basis. From ₹1,453 crore in Q3FY25, revenues shot up to ₹1,971 crore in Q3FY26.
Out of the total revenue, 90% came from the healthcare insurers, as that is Sagility’s primary revenue source. The remaining 10% was generated from the services rendered to the healthcare providers.
The company witnessed a 20% YoY organic growth in its revenue during the quarter, driven by business expansion within the existing clients, and contributions from new clients acquired during FY26.
The company onboarded three new clients during the quarter, and a total of 12 new clients in FY26 until 31st December 2025.
Escalating Profits
Sagility didn’t just witness a rise in its revenue, but that revenue actually got converted into profits. During Q3FY26, the profits grew by 35% YoY from ₹217 crore in Q3FY25 to ₹268 crore.
Even as the company’s profits surge, its return ratios are yet to catch up.
The return on equity (ROE) is at 7.38%, lower than the industry median of 12.68%. Similarly, Return on capital employed (ROCE) also stood at 9.58%, lower than the industry median of 16.12%.
As the company’s business matures, these return ratios should improve. One needs to keep a close watch to ensure the numbers move in the right trajectory.
Favourable OEP Season
Another factor that might have drawn the institutional investors is the favourable Open Enrolment Period season (OEP) in FY26.
In the US, there is an Annual Enrolment Period (AEP) and an Open Enrolment Period for insurance policy enrolments. Usually in Sagility, the OEP season contributes to around 3% of the annual revenue historically; however, in FY26, it has contributed to around 5.5% of the total revenue. Management expected the same to grow up to 4.5% post BroadPath acquisition, but it has surpassed that expectation and went up to 5.5%.
Management expects the acquisition of BroadPath to bring more opportunities in the coming season and over the next 2 to 3 years.
AI Integration
Sagility is using AI and technology to not just process insurance applications, but to make healthcare service easy and smooth for both payers and providers. It has deployed 32 distinct AI-driven use cases across 10 clients with more in the pipeline. All these AI use cases are deployed to increase efficiency, reduce cost, and provide other benefits.
Pivotal Industry Shift
There has been a shift in the healthcare insurance industry in the US, and 2026 is expected to be a pivotal year in that process. The Payers are shifting towards margin repair instead of membership growth. This is expected to work in favour of Sagility as it has tie-ups with the large Payers in the US healthcare market.
With the shift towards efficiency and quality over quantity, the industry is shifting its focus towards Digital and AI-led operating models for the insurance plans and also emphasizing more on outsourcing for improving margins without compromising the plans’ benefits.
Fair Valuation
The stock is currently trading at a price/earnings (PE) of 26.3x, which is at par with the industry median. The price earnings to growth (PEG) ratio, however, stands at 0.09, while the industry median is 0.59. This suggests that adjusted for growth, the stock is cheaper compared to the industry median.
1-Year Share Price Chart of Sagility Ltd.
Final Thoughts
For Sagility Ltd., it is perhaps the strong fundamentals and macro factors that are playing pivotal roles rather than the overall negative sectoral sentiment.
Robust revenue and profit growth, coupled with new client acquisitions and the overall industry shifting towards an AI-led operating model, is probably attracting the institutional investors to add more of this stock to their portfolios. Moreover, the valuation is still reasonable in an overvalued market, which might be another reason for drawing attention.
Disclaimer:
We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.
Maumita Mitra is a seasoned writer specializing in demystifying the world of investment for a broad audience. She has a keen eye for detail and a knack for explaining complex financial concepts in the simplest manner possible.
Disclosure: The writer and her dependents do not hold the stocks discussed in this article.
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