New IPO at Rs 30 per share: Should you subscribe amid market uncertainties?

Mandar Wagh
/ Categories: Trending, IPO, IPO Analysis
New IPO at Rs 30 per share: Should you subscribe amid market uncertainties?

In this analysis, we take a closer look at Sagility India Ltd and present you with the exclusive IPO details.

About the issue  

Sagility India Ltd is preparing to launch its Initial Public Offering (IPO) for equity shares. See the issue details below.

IPO Details
IPO Opening Date  November 05, 2024
IPO Closing Date  November 07, 2024
Issue Type  Book Built Issue IPO
Face Value Rs 10 per equity share
IPO Price  Rs 28 to Rs 30 per equity share
Min Order Quantity  500 shares
Listing At  BSE, NSE
Total Issue 702,199,262 shares of FV Rs 10*
(Aggregating up to Rs 2,106.60 Cr)*
Offer for Sale 702,199,262 shares of FV Rs 10*
(Aggregating up to Rs 2,106.60 Cr)*
QIB Shares Offered  75% of the Offer
Retail Shares Offered  10% of the Offer
NII (HNI) Shares Offered 15% of the Offer
*At Upper Price Band  

Objects of the Issue  

Considering that the issue is exclusively an offer for sale, it is crucial to note that the company will not profit from the offer proceeds. Instead, all offer proceeds will flow to the selling shareholders, distributed in accordance with the number of offered shares they sell as part of the offer.

Promoter holding  

Sagility B.V. and Sagility Holdings B.V. are the promoters of the company. The promoters and promoter group currently hold a pre-issue shareholding stake of 100 per cent in the company.

DSIJ's 'Value Pick' service recommends long-term stocks based on Value Investing Philosophy. If this interests you, do  download the service details here.

Company profile

The company offers technology-driven business solutions and services tailored to clients within the U.S. healthcare sector. As a pure-play, healthcare-focused service provider, its client base includes both ‘Payers’ - U.S. health insurance companies responsible for financing and reimbursing healthcare costs and ‘Providers’ - such as hospitals, physicians, and companies in diagnostics and medical devices.

For Payers, the company supports various operational functions, including (i) core benefits administration tasks like claims management, enrolment, benefit plan creation, premium billing, credentialing, and provider data management, and (ii) clinical functions like utilization management, care management, and population health management. Its services for Providers span revenue cycle management, encompassing financial clearance, medical coding, billing, and accounts receivable follow-up.

The company delivers these services through a skilled workforce distributed across five global service delivery centres located in India, the Philippines, the U.S., Jamaica, and Colombia. In FY24, it assisted Payer clients in processing 105 million claims and managing over 75 million interactions with Members and Providers.

Financials 

 Rs (in crore)   FY22    FY23    FY24    Q1FY25 
 Revenue                    944         4,236         4,781          1,248
 Profit before tax                       -2            186             242                71
 Net profit                       -5            144             228                22

The company experienced a sudden strong topline and bottom-line growth in FY23 compared to FY22 and continued to show decent growth thereafter. Around 80 per cent of the company’s revenue is generated from its five largest client groups. Despite achieving similar revenue figures on an annualized basis for FY25, its profit was notably lower, primarily due to decreased operating margins and substantial tax expense. As of June 30, 2024, the company reported total borrowings amounting to Rs 944 crore. Since the issue is structured as an offer for sale, the company will not receive any proceeds for loan repayment or future expansion initiatives.

Valuation & Outlook
The company stated that, due to its exclusive focus on the healthcare sector, serving both payer and provider markets, there are no listed service providers in India or globally that directly compare in terms of size and business model.

The issue is priced with a P/BV ratio of 1.85 times, calculated using its Net Asset Value (NAV) of Rs 16.25 as of June 30, 2024.

Based on the company’s annualized FY25 earnings and fully diluted equity capital, the price-to-earnings (PE) ratio is 150. Even when evaluated using FY24 earnings, the PE ratio stands at 57, highlighting that the stock is still a costly investment option.

As of June 30, 2024, the company reported a return on net worth of just 0.29 per cent. Given the low returns and current weak market conditions, we recommend that investors avoid this costly investment.

Rate this article:
5.0

DSIJ MINDSHARE

Mkt Commentary6-Dec, 2024

Swing Trading8-Dec, 2024

Penny Stocks6-Dec, 2024

Multibaggers6-Dec, 2024

Multibaggers6-Dec, 2024

Knowledge

MF15-Nov, 2024

General15-Nov, 2024

MF14-Nov, 2024

DALAL STREET INVESTMENT JOURNAL - DEMOCRATIZING WEALTH CREATION

Principal Officer: Mr. Shashikant Singh,
Email: principalofficer@dsij.in
Tel: (+91)-20-66663800

Compliance Officer: Mr. Rajesh Padode
Email: complianceofficer@dsij.in
Tel: (+91)-20-66663800

Grievance Officer: Mr. Rajesh Padode
Email: service@dsij.in
Tel: (+91)-20-66663800

Corresponding SEBI regional/local office address- SEBI Bhavan BKC, Plot No.C4-A, 'G' Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400051, Maharashtra.
Tel: +91-22-26449000 / 40459000 | Fax : +91-22-26449019-22 / 40459019-22 | E-mail : sebi@sebi.gov.in | Toll Free Investor Helpline: 1800 22 7575 | SEBI SCORES | SMARTODR