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Unlisted shares of Sagility India Ltd are currently trading just Rs 0.30 higher in the grey market, signalling a 1 per cent listing gain from the public issue.
Sagility India IPO.
Sagility India IPO: The initial public offering (IPO) of Sagility India Ltd, a technology-enabled services provider in the healthcare space, is going to be closed today, Thursday. The price band of the Rs 2,106.6-crore IPO has been fixed at Rs 28-Rs 30 per share. Till 10:54 am on the final day of bidding on Thursday, the IPO received a 0.64 times subscription, garnering bids for 24,92,92,500 shares as against the 38,70,64,594 shares on offer.
The IPO had received a 0.52 times subscription on the second day of bidding on Wednesday.
The Sagility India IPO was opened for public subscription on November 5. Its allotment will be finalised on November 8, while the share listing is likely to take place on November 12.
Sagility India IPO: Price and Lot Size
The price band of the IPO has been fixed in the range of Rs 28 to Rs 30 per share.
The minimum lot size for an IPO application is 500 shares. So, retail investors require a minimum of Rs 15,000 investment to apply for the IPO.
The minimum lot size investment for small NII is 14 lots (7,000 shares), amounting to Rs 2,10,000, and for big NII, it is 67 lots (33,500 shares), amounting to Rs 10,05,000.
Sagility India IPO GMP Today
According to market observers, unlisted shares of Sagility India Ltd are currently trading just Rs 0.30 higher in the grey market than its issue price. The Rs 0.30 grey market premium or GMP means the grey market is expecting a 1 per cent listing gain from the public issue.
The GMP is based on market sentiments and keeps changing. ‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.
Sagility India IPO: Analysts’ Recommendations
Most brokerage firms have recommended a ‘buy for long term’ rating to the IPO.
Master Capital Service Ltd in its IPO note said, “The healthcare operations spend in the US has grown at a CAGR of approximately 3.2% from 2014 to 2023 and was valued at approximately US$201.1 billion (Rs16.8 trillion) in 2023. This spend is expected to grow at a CAGR of approximately 5.2% to reach approximately US$258.9 billion (Rs 21.6 trillion) in 2028, driven by the rise in aging population, increasing prevalence of chronic diseases, and various governmental initiatives aimed at enhancing healthcare services, among other factors. The US healthcare industry is characterized by complex services, stringent compliance requirements, intricate performance measures, and multifaceted payment workflows.”
These challenges necessitate the involvement of specialised service providers who possess the expertise to navigate and manage these complexities effectively. Sagility India Limited is one of the leading tech-enabled healthcare specialists with comprehensive coverage across healthcare payer and provider markets, it added.
“The company’s deep, long-term, expanding client relationships across healthcare payers and providers assist in high client stickiness and retention. Investors interested in the company can invest in the IPO for the long term,” Master Capital said.
Another brokerage Bajaj Broking also granted a ‘subscribe for long term’ rating.
“On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit/ – (loss) of Rs. 944.39 cr. / Rs. -(4.67) cr. (FY22), Rs. 4236.06 cr. / Rs. 143.57 cr. (FY23), and Rs. 4781.50 cr. / Rs. 228.27 cr. (FY24). For Q1 of FY25 ended on June 30, 2024, it posted a net profit of Rs. 22.29 cr. on a total income of Rs. 1247.76 cr. As per historic data, this segment has sluggish first half and major activities and earnings happens in the second half as usual.”
If we attribute annualized FY25 earnings to post-IPO fully diluted equity base, then the asking price is at a P/E of 157.89 and based on FY24 earnings, the P/E stands at 61.22. Thus the issue appears aggressively priced, according to Bajaj Broking.
The company reported PAT margins of 7.17% (FY22), 10.80% (FY23), 12.40% (FY24), 11.83 % (Q1-FY25), but RoCE margins data is missing from the offer document.
Sagility India IPO: More Details
The Bengaluru-based Sagility India’s proposed IPO is entirely an offer for sale (OFS) of 70.22 crore shares, by promoter Sagility B V, worth Rs 2,106.60 crore at the upper end of the price band.
The offer includes a reservation for subscription by eligible employees.
Since it is an OFS, the company will not receive any proceeds from the public issue, and the entire fund will go to the selling shareholders.
The objective of the initial share-sale is to gain the advantages of listing the equity shares on stock exchanges, the company stated.
Additionally, the company anticipates that listing the equity shares will boost its visibility and brand image, provide liquidity to its shareholders, and establish a public market for the equity shares.
The company said that 75 per cent of the issue size has been reserved for qualified institutional buyers, 15 per cent for non-institutional investors and the remaining 10 per cent for retail investors. Investors can bid for a minimum of 500 equity shares and in multiples of 500 thereafter.
The company provides technology-driven services to both payers (US health insurance companies, which finance and reimburse the cost of health services), and providers (primarily hospitals, physicians, and diagnostic and medical devices companies).
In March 2024, Sagility acquired BirchAI, a healthcare technology firm specialising in cloud-based generative AI technology. This acquisition is expected to enhance member and provider engagement and reduce clients’ operational costs through AI-powered customer support solutions using speech-to-text and large language models (LLMs) integrated with Sagility’s engagement solutions.
As of March 31, 2024, Sagility had 35,044 employees, 60.52 per cent of them women, up from 30,830 a year ago.
Sagility India’s revenue from operations during fiscal year 2024 increased 12.7 per cent to Rs 4,753.56 crore against Rs 4,218.41 crore a year ago. Profit after tax soared 50 per cent to Rs 228.27 crore from Rs 143.57 crore in the preceding year.
For the three months ended June 30, 2024, revenue from operations stood at Rs 1,223.33 crore and profit after tax at Rs 22.29 crore.
ICICI Securities, IIFL Securities, Jefferies India, and JP Morgan India are the book-running lead managers to the issue. The company’s equity shares are proposed to be listed on the BSE and NSE.
