Sagility India, a leader in providing technology-enabled business solutions to the U.S. healthcare industry, is preparing for its Initial Public Offering (IPO), which opens for subscription on November 5, 2024, and closes on November 7, 2024. The company provides services to Payers (U.S. health insurance companies) and Providers (hospitals, physicians, and medical device companies), solidifying its position as a pure-play healthcare services provider. Below, we break down the IPO’s key details, financials, objectives, and recommendations.

IPO Overview

The Sagility India IPO is an Offer for Sale (OFS) of 7,021.99 lakh shares, with a price band set at ₹28 to ₹30 per share. The total offering is valued at approximately ₹2,106.60 crore. At the upper price band of ₹30, Sagility India’s market capitalization will be ₹14,043.98 crore, providing a significant investment opportunity in the healthcare sector.

The lot size is 500 shares, with a minimum investment of ₹15,000 for retail investors. For high-net-worth individuals (HNIs), the minimum investment required is ₹2,10,000 for 14 lots (420 shares).

IPO Objectives and Use of Proceeds

Unlike many IPOs that issue fresh shares, Sagility India is raising capital solely through an Offer for Sale (OFS) by the Promoter Selling Shareholder. The proceeds from this offer will be used primarily to achieve the benefits of listing the company on the BSE and NSE, and the rest will facilitate the sale of equity shares held by the promoters.

Financial Performance and Valuation

Sagility India has seen impressive revenue growth, with revenues of ₹47,815.04 million in FY24, up from ₹42,360.60 million in FY23. The EBITDA for FY24 is ₹11,160.37 million, indicating strong operational performance. The company also reported a Profit After Tax (PAT) of ₹2,282.66 million for FY24, reflecting a turnaround from losses in FY22.

For the IPO, the pre-issue EPS is ₹0.53, and the post-issue EPS is projected at ₹0.48. The pre-issue Price-to-Earnings (P/E) ratio is 56.60x, while the post-issue P/E ratio is 62.5x. Compared to the broader market, these ratios suggest that the IPO is fairly priced, though not at a substantial discount.

Grey Market Premium and Investor Sentiment

The Grey Market Premium (GMP) of the Sagility India IPO is currently reported at ₹0, reflecting a neutral outlook in terms of potential listing gains. This indicates that the market is uncertain about the immediate listing performance of the IPO, and speculative trading is likely subdued.

IPO Subscription and Allotment Process

The IPO will remain open for subscription from November 5 to November 7, 2024. The allotment date is set for November 8, 2024, and shares are expected to be listed on the BSE and NSE on November 12, 2024.

Investors can check their allotment status by visiting the registrar’s website and entering their application number, PAN, or DP Client ID.

Sagility India IPO Anchor Investors

Sagility India has raised ₹945.40 crore from anchor investors at the ₹30 per share price, with a total of 31,51,34,668 equity shares allocated to these investors. This is a strong sign of confidence from institutional investors, though it does not necessarily guarantee immediate listing gains.

Recommendation

Given the financials and valuation metrics, the Sagility India IPO is fairly priced, but the neutral Grey Market Premium and the fact that it’s an Offer for Sale (OFS) suggest that it might not deliver significant listing gains. If you are looking for short-term profits, we recommend avoiding this IPO. However, for long-term investors, the company’s solid financial performance and established position in the healthcare services industry may provide value over time.

Final Thoughts

Sagility India represents an interesting play in the growing U.S. healthcare services sector. Despite being fairly priced, the lack of Grey Market Premium and neutral market sentiment suggest that short-term listing gains may be limited. As such, prospective investors should evaluate carefully before subscribing to this IPO.

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