Buy Sagility Ltd for the Target Rs 54 by Motilal Oswal Financial Services Ltd
Higher MLR among US payers accelerating outsourcing
* Sagility’s practices are designed to manage and improve critical healthcare operations across the payer and provider ecosystem. These capabilities span the full healthcare value chain, combining deep domain expertise with operational execution to deliver measurable outcomes.
* Services further advance through consulting and technology services, including assessments, transformation programs, platform enablement, and AI-led orchestration.
* Member LCM: It supports end-to-end member journey, including enrolment, billing, reconciliation, benefits management and ongoing engagement. This helps payers improve accuracy and timeliness, reduce revenue leakage and improve member experience.
* Clinical (UM/CM): It includes utilization management, case management, disease programs, and quality initiatives. These services deliver better care coordination and improved clinical and financial outcomes for our payer and provider clients.
* Payment integrity (PI): It focuses on identifying, preventing, and recovering inappropriate payments across the claim’s lifecycle. This helps payers reduce leakage and gain better financial control.
* Claims management: It encompasses intake, adjudication support, rework, and appeals. These services enable payers to improve claims accuracy, reduce turnaround times, enhance operational efficiency and improve provider and member engagement.
* Provider RCM: It supports providers in billing, coding, denial management, and collections to improve revenue realization and cash flow performance.
We like Sagility’s integrated approach of moving beyond isolated process execution toward managing connected workflows and delivering measurable outcomes across healthcare operations. This differentiated model creates a strong right to win vs. peers in capturing incremental business from payers. Its key strength lies in its ability to scale up efficiently, maintain exceptional attention to detail, and consistently deliver high-quality outcomes while meeting turnaround time requirements
Valuation and view
We believe FY27 will be the year of growth normalization, considering a high base of FY26. We expect Sagility to deliver low double-digit growth, with broadly stable margins in the current range. We believe new logo additions, cross-selling opportunities and synergy from acquisitions will drive a CAGR of 19%/19%/23% in revenue/EBITDA/PAT over FY26-28. Accordingly, we reiterate our BUY rating on the stock with a TP of INR54 (based on 18x on FY28E EPS).
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