What Drove Sagility’s Strong Q2 FY26 Earnings and GenAI-Led Margin Expansion?
About Sagility: Sagility, a leading healthcare-focused BPM company, continues to strengthen its position through technology-led transformation, client diversification, and margin improvement. The firm has leveraged GenAI integration and automation to drive operational efficiency across U.S. payer and provider segments.
In Q2 FY26, Sagility delivered robust double-digit growth and achieved record EBITDA margins driven by AI-led productivity gains, new client wins, and strong performance in the U.S. payer vertical. Management also raised FY26 guidance for revenue and margins, citing favorable execution momentum.
Sagility Q2 FY26 Highlights
| Metric | Q2 FY26 | YoY Change |
|---|---|---|
| Revenue | ₹16,585 Mn | ↑ 25.2% |
| EBITDA | ₹4,352 Mn | ↑ 25.6% |
| EBITDA Margin | 26.2% | ↑ 60 bps |
| PAT | ₹3,100 Mn | ↑ 84% |
| Guidance Update | Revenue >21% CC | Revised upward |
Management highlighted strong client traction and improved cash conversion, driven by automation and GenAI deployment. The payer business contributed nearly 88.5% of revenue, while provider vertical grew over 33% YoY. Sagility declared an interim dividend of ₹0.50/share for the quarter.
Peer Comparison (BPM & Healthcare Tech)
| Metric | Sagility | Firstsource | eClerx | Coforge |
|---|---|---|---|---|
| CMP (₹) | 59 | 190 | 2,020 | 6,150 |
| P/E (x) | 20 | 22 | 25 | 36 |
| ROE (%) | 21 | 17 | 22 | 25 |
| Revenue Growth (%) | 25 | 12 | 10 | 14 |
Sagility’s P/E valuation remains reasonable compared to peers, despite stronger revenue growth and expanding margins. The company’s healthcare-centric positioning helps reduce cyclicality that impacts general BPM providers.
Valuation Metrics Overview
| Metric | Current | Historical Range | Comment |
|---|---|---|---|
| P/E | 20x | 15–22x | Reasonably priced vs growth trajectory |
| EV/EBITDA | 12x | 10–15x | Attractive for mid-cap BPM |
| ROE | 21% | 17–22% | Efficient capital utilization |
| Dividend Yield | 0.8% | 0.5–1% | Low payout; growth focus |
Analysts remain positive on Sagility’s scalable GenAI model, strong client stickiness, and consistent margin delivery. With over 25 active AI projects and rising healthcare digitization in the U.S., Sagility remains well placed for sustained growth through FY27.
Investment Horizon Verdict
Short Term (1–3 months): Likely to remain stable around ₹55–₹62 with minor volatility.
Medium Term (3–9 months): Potential for 15–20% appreciation as GenAI deals scale up and client retention strengthens.
Long Term (9+ months): A promising digital BPM compounder with expanding margins and sustainable double-digit growth trajectory.
Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, highlights that Sagility’s GenAI integration is turning into a tangible earnings driver. Its focus on healthcare BPM and high EBITDA margins make it a strategic long-term play for investors seeking defensive growth.
Explore more insights at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries on BPM & Healthcare Tech Stocks
- Is Sagility a strong long-term healthcare BPM play?
- How does GenAI improve efficiency for Sagility compared to peers?
- What valuation range is fair for Sagility post Q2 FY26?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
