Target: ₹54
Current Market Price (CMP): ₹42.17
Sagility is a technology provider specializing in healthcare services, primarily catering to U.S. payers, which account for 90% of its revenue. The company serves over 80 clients, boasting an average client tenure of 18 years among its five largest accounts.
The medical loss ratio (MLR)—the ratio of claims paid to premiums earned—is on the rise among payers, including major companies such as United Healthcare, Humana, CVS Aetna, Elevance Health, Cigna, and Centene Corp. Concurrently, administrative costs have increased significantly, with a compounded annual growth rate (CAGR) ranging from 2.5% to 18% over the past decade. These trends are anticipated to create more outsourcing opportunities within the sector.
Currently, the stock is trading at 15.2 times its FY28 estimated earnings per share (EPS), a valuation lower than some of its peers. This is likely attributed to perceived client concentration risks and the scalability of its top accounts, which may be overstated. There is considerable potential for growth with existing clients, alongside new client acquisitions and the complete repayment of debt expected by FY27.
With anticipated robust earnings growth, it is believed the stock should command a higher valuation. Therefore, a BUY recommendation is initiated with a target price of ₹54, assigning a valuation of 19 times FY28E EPS to Sagility.
However, a potential decrease in MLR and administrative costs among payers could diminish the outsourcing requirements, which represents a significant risk to consider.
Published on April 20, 2026.
