One of our junior analysts recently boarded a long-haul train to Chennai for TIA 20:20. That’s a good 17-hour ride from Pune. Not ideal. But hey, it’s India — every train ride comes with two things: overbooked berths and unsolicited stock tips.
Enter: Mr. Ankush. Management consultant. Compartment buddy. And clearly someone who had done his fair share of Twitter scrolling. After the usual icebreakers, Ankush got curious about our analyst’s line of work. That’s not rare. People either get very excited (post-COVID market returns still live rent-free in some minds) or instantly start talking about frauds and how their uncle lost money in XYZ stock.
Anyway, Ankush drops a stock name. A ₹20,000 Cr market cap company. U.S. healthcare play. Tech-driven. Newly listed. Promising TAM. Basically, it sounded like a LinkedIn post gone rogue. Then he got off the train.
Now, with 12 hours to spare and a patchy network, our analyst figured—why not? Let’s do a quick-n-dirty review of Sagility India Ltd. Is it an “easy pass” or a “Looks Interesting and let’s park it for future detailed analysis”?
What follows is a back-of-the-envelope analysis using only what’s publicly available — Annual Report, DRHP, earnings transcripts. Let’s dive in.
So, what does Sagility even do?
Straight from their annual report and DRHP: Sagility is a tech-enabled healthcare services company, helps US-based health insurers and providers with everything from admin tasks (like billing and claims) to clinical functions (like care management). Big in the U.S. Operates across Payers (insurance companies) and Providers (hospitals, clinics etc.). Think of it as a behind-the-scenes operator making sure the US healthcare machine keeps running.
In simple language:
- Payers: Claims management, care programs, and making sure nobody’s overbilling.
- Providers: Help hospitals get their bills sorted and money collected.
Business split? 90% from Payers, 10% from Providers.
Industry Snapshot
The US healthcare ops market — both payers and providers — is expected to grow at ~5% CAGR. (Payers: ~4.8%, Providers: ~6%). Decent tailwinds.
But what really matters here is outsourcing. Sagility and peers thrive only when US firms outsource their operations, not keep them in-house.
- Currently, only 20% of the market is outsourced.
- That outsourced piece? Worth ~$45 billion (₹3.9 lakh crore) as of CY2023.
- And it’s expected to grow at ~9% CAGR over the next five years.
So there’s a big enough pie. The real question: can Sagility grab a bigger slice?
How Sagility is performing?
The company was incorporated on July 28, 2021 and current promoter took charge on January 06, 2022, so public data only goes back to 2022. But here’s what we can see:
Business snapshot: Growth & margins
- Revenue growing at ~12–13% CAGR
- Operating margins steady at ~22%
- Adjusted PAT margins hover around 13–14%
The company claims both growth and margins are sustainable. That said, ~90% of revenue still comes from Payers — they’re trying to ramp up the Provider side too.
Where does Sagility stand competitively?
Everest Group’s 2023 report puts Sagility in the “Market Leader” zone for US healthcare payer operations. It also places them in the “High Coverage” category — meaning Sagility has deep, end-to-end capabilities.
By contrast, players like EXL, Accenture and Cognizant are grouped under broader IT+BPO categories. Sagility’s pitch is clear: we’re not generalists, we’re healthcare ops specialists.
Key strengths
- Client stickiness: Top 5 clients contribute over 80% of revenue, and have been around for ~17 years on average.
- Deep domain experience: Over two decades in healthcare ops.
- Client growth:
- Clients contributing over $1M revenue: Up from 13 (2022) to 25 (2024)
- New client wins: 13 in FY24 vs. 7 in FY23
- Recurring revenues: >90% is recurring (FTE or transaction-based models)
- Trusted by the big guys: Six of its clients are among the Top 10 Payers in US healthcare (out of total 45 client groups to which it provides services).
All in all, Sagility seems to be delivering more value to existing clients while adding new ones.
What gives us pause
- Tiny market share: Revenue of ₹4,754 crore against a ₹3.9 lakh crore outsourced market = ~1.2% share. Management sees that as an opportunity. Fair. But easier said than done. But this is not a very strong case considering that the company has been operating for 20+ years in this market.
- Big sharks in the water: Accenture, Cognizant, and EXL can throw tech, people, and pricing at any problem. And they’re better placed to offer niche tools (think NLP, LLMs, ChatGPT-for-claims).
- Heavy on goodwill: >65% of total assets are goodwill or intangibles — high compared to other mid-tier IT players.
- Tech limitations: Unless Sagility pivots into a BPaaS (Business Process as a Service) model, margins will likely stay flat. Management hasn’t hinted at such a pivot yet.
Valuation: Lofty much?
MCap (as of Feb’25): ₹23,542 Cr
FY24 PAT: ₹228 Cr
That’s a plain old P/E of 103x.
Adjusted PAT? ₹589 Cr → P/E of 40x. Still not cheap, considering:
- Current ~1.12% market share of the company
- No clear margin expansion runway.
- Not quite a BPaaS model (which means new clients don’t lead to better margins).
- Competing in a commoditized space with giants breathing down its neck.
Final Stop: What’s the call?
Sagility might have:
- A large, growing TAM
- Sticky clients
- A stronghold in a niche space
But, it also has…
- Minuscule market share
- No real moat against tech juggernauts
- Pricey valuations without the thrill of hyper-growth
We’re calling it: Easy Pass, & not worth investing further time for now.
Would we revisit this later? Sure. If there’s a strategy pivot, a margin story, or a product-led shift, it might be worth another look.
Until then, the train moves on.
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