Sagility India IPO manages to sail through Day 3 so far, GMP takes a sharp hit

The initial public offering (IPO) of Sagility India managed to sail through on the third and final day of the bidding process after a cold response from the investors. The issue was merely subscribed 23 per cent on the first day and ended day two of bidding barely crossing the halfway mark.

Bengaluru-based Sagility India is selling its shares in the price band of Rs 28-30 apiece. Investors can apply for a minimum of 500 shares and its multiples thereafter. It is looking to raise Rs 2,106.60 crore via IPO, which is entirely an offer-for-sale (OFS) by the promoters of the company.

According to the data, the investors made bids for 40,59,01,500 equity shares, or 1.05 , compared to the 38,70,64,594 equity shares offered for the subscription by 1.00 pm on Thursday, November 7. The three-day bidding for the issue, which opened on Tuesday, November 07, concludes today.

The allocation for retail investors was subscribed 3.08 times, while the portion reserved for non-institutional investors (NIIs) saw a subscription of 49 per cent. The portion for employees was booked 3.10 times. However, the quota set aside for qualified institutional bidders (QIBs) quota saw bids for 63 per cent.

Sagility India, formerly known as Berkmeer India, provides healthcare-focused solutions and services to payers (US health insurers who fund and reimburse the cost of healthcare services) and providers (primarily hospitals, physicians, diagnostics and medical technology companies). It supports the core business of both payers and providers.

The grey market premium of Sagility India has taken a hit following a muted bidding for the issue during the first two days of subscription. Last heard, the company was commanding a premium of Rs 0.30 per share in the unofficial market, suggesting a flat listing, just a per cent higher. GMP stood at Rs 3 apiece before the issue opened for bidding.

Brokerages are most positive on the issue, suggesting to subscribe to it for a long term. Experience management, long term relationship with clients, strong market shares and leadership in the industry are key positives for the issue. On the other hand, dependence on certain clients, entire businesses from the US and 100 per cent OFS nature of issue may dent its prospects.

Sagility holds deep domain expertise and leadership position in the focused payer healthcare market offering comprehensive services as against the other traditional IT players. With the growing outsourcing outlook of the traditionally conservative Healthcare industry, Sagility holds a better position to gain traction and gain market share, said Nirmal Bang Securities.

"Shares are available at an adjusted P/E of 24 times and EV/EBITDA of 13 times FY24 earnings which seems reasonable given its highly focused nature of business and thus recommend 'subscribe' to the issue," it said.

Sagility India reported a net profit of Rs 22.29 crore with a revenue of Rs 1,257.76 crore for the quarter ended on June 30, 2024. It clocked a net profit of Rs 228.27 crore with a revenue of Rs 4,781.5 crore for FY24. The company will command a total market capitalization of more than Rs 14,044 crore.

Bengaluru-based Sagility India raised Rs 945.4 crore from 52 anchor investors ahead of its IPO launch. It has reserved 75 per cent of the net for the qualified institutional bidders (QIBs), 15 per cent for non-institutional investors (NIIs) and 10 per cent for Retail investors.

Sagility India is one of the leading tech-enabled healthcare specialists with comprehensive coverage across healthcare payer and provider markets. The company’s deep, long-term, expanding client relationships across healthcare payers and providers assist in high client stickiness and retention, said Master Capital Services with a 'subscribe for long-term' rating.

ICICI Securities, Jefferies India, IIFL Securities and JP Morgan India are the book running lead managers of the Sagility India IPO, while Link Intime India is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE, with November 12, Tuesday as the date of listing.