Mumbai: Healthcare services company Sagility India delivered a strong performance in the second quarter of FY27, with revenue and operating profit registering healthy year-on-year growth. Following the earnings performance, brokerage firm Motilal Oswal Financial Services maintained its Buy rating on the stock and raised its target price to ₹57.

Sagility reported revenue of ₹2,032.1 crore in Q2 FY27, marking a 22.5% year-on-year increase. Organic revenue growth stood at 22.2%, reflecting continued momentum across the company's healthcare services business.

The company's operating performance also remained strong during the quarter. EBITDA rose 23.4% year-on-year to ₹512.3 crore, while the EBITDA margin stood at 25.2%. The margin performance was significantly better than Motilal Oswal's estimate of 23.3%.

According to the brokerage, Sagility's adjusted EBITDA margin reached 26.3%, its highest level in the last six quarters. Improved operating leverage, delivery efficiencies and favourable foreign exchange movements supported the margin expansion.

PAT Growth Remains Positive

Sagility reported a 13.3% year-on-year increase in profit after tax (PAT) to ₹284.2 crore. However, the reported PAT was below Motilal Oswal's estimate of ₹303.2 crore.

The brokerage noted that the underlying performance remained stronger when other income was excluded, with the company's core operating performance exceeding expectations.

Margin Guidance Raised

One of the key positives from the quarterly results was the company's decision to raise its FY27 adjusted EBITDA margin guidance.

Sagility has increased its guidance to 25%-26%, compared with the earlier range of 24%-25%. The upgraded outlook reflects management's confidence in operating efficiencies and continued improvement in the company's cost structure.

The company expects operating leverage, delivery efficiencies and favourable foreign exchange trends to support profitability going forward.

Motilal Oswal Maintains Buy Rating

Following the results, Motilal Oswal retained its Buy recommendation on Sagility and set a target price of ₹57. The brokerage has based its valuation on a 19x P/E multiple on FY28 estimated earnings per share.

Motilal Oswal expects Sagility's revenue to grow at a 17% CAGR between FY26 and FY28, while EBITDA is projected to grow at 19% and PAT at 23% during the same period.

The brokerage expects growth to be supported by increasing volumes from existing major clients, new client additions, cross-selling opportunities and synergies from acquisitions.

Outlook

Sagility's latest quarterly performance indicates continued strength in both revenue growth and operating margins. The upward revision in margin guidance is particularly significant as it signals improved confidence in the company's profitability trajectory.

However, investors will continue to monitor client concentration, new deal wins, margin sustainability and the company's ability to maintain its growth momentum.

With Motilal Oswal retaining its Buy rating and assigning a ₹57 target price, the brokerage remains positive on Sagility's medium-term growth prospects.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research or consult a qualified financial adviser before making investment decisions.

Source: NDTV Profit / Motilal Oswal