Last update:07 Nov 2024, 11:07 IST

Unlisted shares of Sagility India Ltd are currently trading just Rs 0.30 higher on the gray market, indicating a listing gain of 1% from the public issue.

Sagility India IPO.

Sagility India IPO: Initial Public Offering (IPO) of Sagility India Ltda technology-enabled service provider in the healthcare space, will be closed today, Thursday. The price band of the IPO of Rs 2,106.6 crore was fixed at Rs 28-Rs 30 per share. Till 10:54 am on the last day of auction on Thursday, the IPO was subscribed 0.64 times, garnering bids for 24,92,92,500 shares against the 38,70,64,594 shares on offer.

The IPO was subscribed 0.52 times on the second day of bidding on Wednesday.

Sagility India’s IPO opened for public subscription on November 5. Its allotment will be completed on November 8, while the stock listing is likely to take place on November 12.

Sagility India IPO: Price and Lot Size

The price range 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 need a minimum investment of Rs 15,000 to apply for the IPO.

The minimum lot size investment for small NII is 14 lots (7,000 shares) worth Rs 2,10,000 and for large NII it is 67 lots (33,500 shares) worth Rs 10,05,000 .

Sagility India IPO GMP today

According to market watchers, unlisted shares of Sagility India Ltd are currently trading just Rs 0.30 more on the gray market than the issue price. The gray market premium of Rs 0.30 or GMP means that the gray market expects a listing gain of 1% from the public issue.

GMP is based on market sentiment and keeps changing. The “grey market premium” indicates the willingness of investors to pay more than the issue price.

Sagility India IPO: Analyst Recommendations

Most brokerage firms have recommended a “long-term buy” rating on the IPO.

In its IPO note, Master Capital Service Ltd said: “US healthcare operations spending grew at a CAGR of approximately 3.2% from 2014 to 2023 and was valued at approximately $201.1 billion (16 .8 trillion) in 2023. This expenditure is expected to grow at a CAGR of about 5.2% to reach about USD 258.9 billion (Rs. 21.6 trillion) in 2028 due to population growth in age, the increasing prevalence of chronic diseases and various government initiatives aimed at improving healthcare services, among other factors. The US healthcare industry is characterized by complex services, strict compliance requirements, complex performance measures and multi-faceted payment workflows.”

These challenges require the involvement of specialized service providers who have the expertise to effectively navigate and manage these complexities. Sagility India Limited is one of the leading healthcare specialists with comprehensive coverage in the healthcare payer and provider markets, it added.

“The company’s deep, long-term and extensive customer relationships between payers and healthcare providers contribute to customer loyalty and retention. Investors interested in the company can invest in the IPO for the long term,” said Master Capital.

Another brokerage Bajaj Broking has also given a “long-term subscribe” rating.

“On the financial performance front, for the last three fiscal years, the company posted (on a consolidated basis) 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 the first quarter of FY25 ended June 30, 2024, it posted a net profit of Rs. 22.29 cr. on a total income of Rs. 1247.76 cr. Historically, this segment has a slow first half, with major activity and gains occurring in the second half as usual.”

If we attribute FY25 annualized earnings to fully diluted post-IPO equity base, then the asking price is at a P/E of 157.89 and based on FY24 earnings, the P/E is 61.22. Thus, the problem seems with aggressive pricing, 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 margin data is missing from the offer document .

Sagility India IPO: More details

Bengaluru-based Sagility India’s proposed IPO is an all-in offer for sale (OFS) of 70.22 million shares by promoter Sagility BV at Rs 2,106.60 crore at the upper end of the range of price.

Offer includes one subscription booking by eligible employees.

As it is an SFO, 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 shares on the stock exchange, the company said.

In addition, the Company anticipates that the listing of the Equity Shares will increase visibility and brand image, provide liquidity to its shareholders and create a public market for the Equity Shares.

The company said 75% of the issue size was reserved for qualified institutional buyers, 15% for non-institutional investors and the remaining 10% for retail investors. Investors can bid for a minimum of 500 shares and in multiples of 500 thereafter.

The company provides technology-based services to both payers (the US health insurance companies that finance and reimburse the cost of healthcare services) and providers (primarily hospitals, physicians, and diagnostic and medical device companies).

In March 2024, Sagility acquired BirchAI, a medical technology firm specializing in cloud-based generative AI technology. This acquisition is expected to increase member and supplier engagement and reduce customer operational costs through AI-based customer support solutions using speech-to-text and large-scale language models (LLM) integrated with Sagility’s engagement solutions.

As of March 31, 2024, Sagility had 35,044 employees, of whom 60.52% were women, compared to 30,830 a year ago.

Sagility India’s revenue from operations during fiscal 2024 rose 12.7% to Rs 4,753.56 crore from Rs 4,218.41 crore a year ago. Profit after tax rose 50% to Rs 228.27 crore from Rs 143.57 crore in the previous year.

For the three months ended June 30, 2024, revenue from operations was 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 lead managers of the issue. The company’s shares are proposed to be listed on BSE and NSE.