Sagility India reported a 46% jump in June quarter profit to ₹217 crore, driven by strong revenue growth. However, shares fell over 1% as investors reacted to a contraction in EBITDA margins to 22.3%. The company continues to expand its client base, adding 27 new names during the quarter.
Detailed Coverage
Sagility India’s stock saw a slight decline of over 1% on Wednesday, even as the healthcare-focused technology company posted strong quarterly financial results. For the June quarter, the company reported a consolidated net profit of ₹217 crore, marking a 46% increase compared to the same period last year. This growth was supported by a 27.6% rise in revenue, which reached ₹1,963 crore.
Impact of Margin Contraction
While the headline profit growth was positive, investors focused on the company's profitability ratios. The EBITDA margin, which measures core operating profitability, narrowed to 22.3% from 23% in the previous year's June quarter. Factors contributing to this pressure included foreign exchange losses and provisions made for increased minimum wage requirements. These overhead costs appear to have offset some of the gains from the company's revenue expansion.
Growth and Client Acquisition
During the June quarter, the company actively pursued business growth by onboarding 27 new clients, including CareSeed, bringing its total client count to 109. The firm also secured USD 35.3 million in Annual Contract Value, largely through new work orders and expanded relationships with existing customers. Sagility has been focusing on integrating recent acquisitions like BroadPath and CareSeed to improve its service offerings for Medicare Advantage plans and healthcare quality management. The company is also evaluating the use of artificial intelligence to drive productivity gains in its operations.
Brokerage Outlook
Global brokerage Nomura maintained a positive stance on the company but adjusted its target price from ₹53 to ₹52. Analysts noted that while revenue performance exceeded expectations, the profit projections for FY27 were lowered by approximately 2.5% to factor in the recent wage hikes and currency-related losses. Looking ahead, management expects low double-digit organic growth in constant currency terms for FY27. They anticipate that EBITDA margins will stabilize in the 24% to 25% range as the company works through current wage and operational cost adjustments.
For investors, the key monitorables moving forward will be whether the company can successfully improve its margins back toward the 24-25% guidance range and how effectively it manages wage inflation alongside its continued client acquisition strategy.