Sagility India’s Initial Public Offering: A Detailed Overview
The initial public offering (IPO) of Sagility India has generated significant interest among investors, particularly retail participants, as evidenced by its subscription rate of 3.2 times on the second day of bidding. This surge in interest follows a more modest subscription of 22% on the first day. The IPO, which is entirely an offer-for-sale (OFS) by the promoter, Sagility B.V., aims to raise Rs 2,106 crore through the sale of 70.22 crore shares, with no fresh issue component involved.
Subscription Breakdown
As of the second day of bidding, the IPO attracted a total of 3.2 times the bids against an issue size of 38,70,64,594 shares. The retail portion of the offering saw particularly strong participation, being subscribed at 4.14 times. Non-institutional investors also showed interest, with a subscription rate of 1.93 times. Qualified institutional buyers (QIBs) demonstrated robust demand, subscribing 3.52 times for the shares available in their category. This diverse interest from various investor segments highlights the potential appeal of Sagility India’s offering.
Pricing and Market Sentiment
The price band for the IPO has been set between Rs 28 and Rs 30, allowing investors to bid for a minimum of 500 shares in one lot. However, the shares were trading with a grey market premium (GMP) of Rs 0, indicating muted demand in the unlisted market. This lack of enthusiasm may reflect broader market sentiments, which analysts suggest could impact the IPO’s performance upon listing.
Mixed Analyst Reviews
Analysts have expressed mixed opinions regarding the Sagility India IPO. Some caution against investing, noting that the entire offering is an OFS and that the valuations appear high. Concerns have also been raised about the potential impact of negative market sentiments on both subscription numbers and listing performance. Swastika Investmart pointed out that the company’s exclusive focus on the U.S. healthcare market could expose it to risks associated with political changes, such as the outcomes of U.S. presidential elections. They recommend that investors consider skipping this IPO.
Conversely, Master Capital Service highlighted the company’s strong client relationships within the healthcare sector, suggesting that investors with a long-term perspective might find value in participating in the IPO.
Company Profile and Financial Performance
Sagility India specializes in providing technology-driven solutions to U.S. healthcare payers and providers, including health insurance companies, hospitals, and medical device manufacturers. The company has reserved a total of 19 lakh shares for its employees at a discount of Rs 2 on the final price. The allocation of shares is structured with 75% reserved for qualified institutional buyers, 15% for non-institutional investors, and 10% for retail investors.
Financially, Sagility India reported a 47.5% decline in profit to Rs 22.3 crore for the quarter ending June 2024, primarily due to decreased operating margins and higher taxes. Despite this, revenue rose by 9.6% to Rs 1,223.3 crore. The company’s EBITDA fell by 26.4% to Rs 193.9 crore, with margins shrinking by 777 basis points to 15.85%. However, in FY24, Sagility’s net profit surged by 59% to Rs 228.3 crore, driven by reduced finance costs and increased other income. Revenue grew by 12.7% to Rs 4,753.6 crore, while EBITDA rose by 5.9% to Rs 1,088 crore, although margins declined by 150 basis points to 22.9%.
Conclusion
The IPO of Sagility India presents a compelling opportunity for investors, especially those interested in the healthcare technology sector. However, potential investors should weigh the mixed reviews from analysts, the current market sentiment, and the company’s financial performance before making investment decisions. With lead managers like ICICI Securities, IIFL Securities, Jefferies India, and JP Morgan India overseeing the IPO, the offering is poised to attract significant attention as it progresses.
As always, it is crucial for investors to conduct thorough research and consider their risk tolerance before participating in any IPO.