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Revenue in line; beat on earnings raises margin guidance

* Sagility’s 2QFY27 revenue grew 22.5% YoY to INR20,321m (in line), with organic revenue growth of 22.2% YoY (11.9% in CC terms). EBITDA stood at INR5,123m (est: INR4,735m), with a margin of 25.2% (est: 23.3%), above our estimates. PAT stood at INR2,842m (est: INR3,032m), below our estimates. However, excluding other income, PAT beat our expectations. Overall, revenue/EBITDA/PAT grew 22.5%/23.4%/13.3% YoY.

* Management maintained its FY27 guidance of low double-digit organic CC revenue growth, despite expecting AEP and OE revenue to be slightly lower YoY, citing healthy underlying business momentum and a robust pipeline. Following the adjusted EBITDA margin expansion in 2Q to 26.3%, the highest in six quarters, management raised its FY27 adjusted EBITDA margin guidance from 24–25% to 25–26%. This upgrade was supported by operating leverage, delivery efficiencies, and favorable forex movements.

* We expect Sagility to deliver low- to mid-teens growth in FY27. In the long term, increased volume of work from top clients, new logo additions, crossselling, and synergy from acquisitions will drive its revenue/EBITDA/PAT CAGR of 17%/19%/23% over FY26-28. We value the stock at 19x P/E on FY28E EPS to arrive at our TP of INR57. Reiterate BUY.

AI-led transformation and end-to-end payer & provider capabilities boost growth visibility

* Sagility raised its FY27 adjusted EBITDA margin guidance to 25–26%, supported by operating efficiencies, favorable FX, and geographical mix. The INR148m quarterly impact of statutory wage revisions is already factored into guidance, while further productivity gains could aid margins.

* Chirok posted TTM revenue of USD13m, adjusted EBITDA margin of 35.8%, and net revenue retention of 115%. Its expertise in clinical documentation, medical coding, risk adjustment, and HEDIS boosts Sagility’s end-to-end RCM offering, creating cross-selling opportunities and scope for larger provider contracts.

* Providers contributed 10.1% of 2Q revenue, with Sagility targeting a notable increase over time through a dedicated sales team and Chirok’s capabilities. The expanded portfolio enhances access to physician groups and value-based care organizations, although no specific revenue-mix target has been provided.

* Sagility secured a payment integrity engagement with a Big Ten health plan covering over 10m members, with minimum potential ACV exceeding USD10m; contingency-based revenue is expected to build progressively.

* The deal pipeline includes managed services opportunities with blue plans and mid-market payers, while broader end-to-end capabilities could help Sagility secure larger provider engagements.

* AI is increasingly central to client discussions, with Sagility progressing from individual use cases toward end-to-end agentic AI workflows.

Valuation and view

We expect Sagility to deliver low- to mid-teens growth in FY27. In the long term, increased volume of work from top clients, new logo additions, cross-selling, and synergy from acquisitions will drive its revenue/EBITDA/PAT CAGR of 17%/19%/23% over FY26-28. We value the stock at 19x P/E on FY28E EPS to arrive at our TP of INR57. We reiterate our BUY rating on the stock.

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