Prabhudas Lilladher has maintained a positive rating on Sagility following a strong second-quarter margin performance of 26.3%. The brokerage raised the company's margin guidance for fiscal 2027 to 25-26%, driven by operational gains and the integration of new acquisitions like Chirok Health. Investors may watch how the company balances revenue growth with margin expansion as it navigates demand from US healthcare clients.
Sagility recently reported a strong second-quarter performance for fiscal 2027, sparking positive commentary from brokerage firm Prabhudas Lilladher. The healthcare-focused service provider recorded an adjusted profit margin of 26.3%, which was higher than the market estimate of 24.7%. This improvement in profitability was largely attributed to better operational efficiency and gains from currency fluctuations, helping the company outperform expectations on the margin front.
The company has also been active on the expansion front, having completed the integration of CareSeed. Furthermore, it recently acquired Chirok Health, an addition that contributes roughly US$13 million in trailing revenue and operates at a margin of 35.8%. These acquisitions are part of the company's broader strategy to diversify its business beyond its core payer-led services and create more opportunities for selling additional services to existing clients. Following these developments, management has increased its adjusted margin guidance for fiscal 2027 to a range of 25% to 26%, up from the previous estimate of 24% to 25%.
While profitability metrics are trending upward, revenue growth remains a factor for investors to monitor. Sagility reported 12.2% growth on a year-over-year basis, but this figure came in slightly below some initial projections. The company also adjusted its outlook for revenue tied to the annual enrollment period, resulting in a minor downward revision of 100 basis points. Despite this adjustment, the firm maintains a low-double-digit growth outlook for its core business.
Prabhudas Lilladher has updated its earnings estimates for fiscal 2028 and 2029, raising them by roughly 3% each. The brokerage has reiterated a positive rating on the stock, with a target price of Rs 60 based on its valuation models for September 2028. For investors, the path forward will likely depend on the company's ability to maintain high margins while managing revenue growth in the competitive US healthcare outsourcing sector. Key areas to track will include the successful integration of newly acquired assets, client retention, and any shifts in demand from large US healthcare payers that could impact long-term revenue targets.