Sagility shares fall 4% despite 22% revenue growth in Q2: Should you buy, sell or hold?

Its adjusted EBITDA margin expanded to 26.3%, prompting the company to raise its FY27 adjusted EBITDA margin guidance to 25-26% from 24-25% earlier. Net profit increased 13.1% year-on-year to Rs 284 crore. Nomura retains 'Neutral', raises target price to Rs 56 Nomura has retained its 'Neutral' rating on Sagility India while raising its target price to Rs 56 from Rs 53 after factoring in the header should have buy sell or hldQ2FY27 results.

The brokerage said revenue of $213 million, up 11.9% year-on-year in constant currency terms, was in line with its estimates. However, the EBITDA margin of 26.1% beat its estimate of 24%, rising 230 basis points quarter-on-quarter and 110 basis points year-on-year. Diluted earnings per share increased 15% year-on-year to Rs 0.61. Sagility has retained its guidance for low double-digit organic revenue growth in constant currency terms for FY27, while raising its margin guidance to 25-26% from 24-25%.

Nomura expects revenue growth of 12-12.7% year-on-year in dollar terms, with EBITDA margins of 23.9-24% for FY27-28. It said Sagility's "strong domain expertise and client relationships" position it well for sustained medium-term growth. The brokerage, however, maintained its 'Neutral' rating, citing a weaker outlook for off-highway demand in Europe and rising commodity costs. Its target price of Rs 56 is based on an unchanged valuation multiple of 18 times FY28 forecast earnings per share.

Motilal Oswal reiterates 'Buy', sets target price at Rs 57 Motilal Oswal has reiterated its 'Buy' rating on Sagility and set a target price of Rs 57, valuing the stock at 19 times its FY28 estimated earnings per share. The brokerage said Q2FY27 revenue grew 22.5% year-on-year to Rs 20,321 million, in line with estimates, while EBITDA came in at Rs 5,123 million against its estimate of Rs 4,735 million.

The EBITDA margin of 25.2% was above its estimate of 23.3%. Profit after tax stood at Rs 2,842 million, below its estimate of Rs 3,032 million, although adjusted for other income, profit after tax beat expectations. Motilal Oswal expects Sagility to deliver low- to mid-teens growth in FY27. It expects increased business from top clients, new client additions, cross-selling and acquisition synergies to drive revenue, EBITDA and profit after tax compound annual growth rates of 17%, 19% and 23%, respectively, over FY26-28.

The brokerage also highlighted the company's raised margin guidance, operating efficiencies and opportunities from its Chirok acquisition, which expands its revenue cycle management capabilities.