Sagility India shares list at 3.5% premium over IPO price

Sagility India IPO lists at a modest premium, drawing mixed views on valuation but strong demand from investors across segments.

In Short

• Sagility India shares debut at 3.5% premium over IPO price
• IPO receives 3.2 times subscriptions, strong demand across categories
• Brokerages favor IPO for long-term, note healthcare sector growth

Sagility India’s shares made a modest debut on the stock exchanges on Tuesday, listing at Rs 31.06 on both the NSE and BSE, marking a 3.5% premium over the issue price of Rs 30 per share.

The initial public offering (IPO), worth Rs 2,106.60 crore, was open for subscription from November 5 to November 7, with a price band set between Rs 28-30 per share.

The Sagility IPO saw robust demand, closing with 3.2 times subscriptions. It received bids for 123.99 crore shares against the 38.7 crore shares available. The retail investor segment was booked 4.16 times, non-institutional investors (NII) subscribed at 1.93 times, and qualified institutional buyers (QIB) at 3.52 times. Additionally, the employee quota received 3.75 times bids.

The IPO was solely an offer for sale (OFS) of 70.22 crore shares, with no fresh equity issuance. Following the issue, the promoters’ stake in the company will be reduced to 82.5%. On November 4, 2024, the company raised Rs 945.4 crore from anchor investors. The minimum lot size for retail investors was set at 500 shares, requiring an investment of at least Rs 15,000.

Sagility India will not receive any proceeds from the share sale; the OFS was aimed at listing the company on the stock exchanges and reducing promoter holdings.

The issue included a reservation for employees, offering up to 1.9 million shares at a Rs 2 discount per share to the issue price. ICICI Securities, IIFL Securities, Jefferies India, and J.P. Morgan India were the lead managers for the IPO, with Link Intime India as the registrar.

Brokerages were largely optimistic about the IPO, advising investors to consider it for long-term gains. Master Capital Service highlighted the favorable outlook of the US healthcare sector, noting that healthcare spending in the US grew at a 3.2% CAGR from 2014 to 2023, reaching $201.1 billion in 2023, and is projected to grow further at 5.2% CAGR to $258.9 billion by 2028.

They highlighted Sagility India’s strong connections with healthcare payers and providers, as well as its experience in navigating the sector’s complex regulations and compliance requirements.

Bajaj Broking also recommended the IPO for long-term investors, pointing to Sagility India’s average earnings per share (EPS) of Rs 0.37 and return on net worth (RoNW) of 2.52% over the past three years. They noted the IPO’s price-to-book value (P/BV) ratio of 1.85 but warned that it appears aggressively priced at a price-to-earnings (P/E) ratio of 157.89 based on projected FY25 earnings.