Explained: Why Sagility India Ltd shares fell 5% today
Shares of Sagility India Ltd dropped by 5% in early trade on Tuesday, falling to Rs 40.72 on the NSE. This fall was in line with the broader market weakness. The stock has now declined 7.18% in the past five trading sessions.The main reason behind the fall is the announcement of a large stake sale by one of the company's promoters through an offer for sale (OFS). Sagility BV, a promoter entity, plans to sell up to 15.02% stake in the company over two days. The OFS began today for non-retail investors, with the retail portion scheduled for tomorrow, May 28.DETAILS OF THE OFFER FOR SALEThe OFS includes a base offer of 346,132,843 shares, which equals 7.39% of the total paid-up equity share capital of the company. If the oversubscription option is fully used, the total number of shares being offered will rise to 703,000,000, which is 15.02% of the total shareholding.The floor price for the OFS is set at Rs 38 per share. This is 11.66% lower than Monday's closing price of Rs 43.02, which has made investors cautious and led to selling pressure.Non-retail investors could bid in the OFS on Tuesday. Retail investors will be able to place their bids on Wednesday. Also, non-retail investors who did not get full allotment today can carry forward their bids to tomorrow.COMPANY OUTLOOK REMAINS POSITIVEDespite the sharp fall in share price, the company has said it remains confident of steady performance through the next financial year. It expects growth supported by a strong balance sheet, a wide client base, and consistent business execution.JM Financial said that Sagility is expecting low to mid-teen growth in constant currency for its main business. Including the impact of BroadPath, a recent acquisition, overall revenue growth is likely to be over 20%.The company's management has also kept its guidance for adjusted EBITDA margin between 24% and 25% for FY26. This does not include the 100-120 basis point negative impact from BroadPath.JM Financial further added that Sagility sees a 1.5% to 2% business impact due to artificial intelligence (AI), which has already been included in its growth guidance. This AI impact is expected to increase to around 4% to 5% over the next two to three years.BROKERAGE VIEW ICICI Securities, in its research note dated May 16, maintained a 'Buy' rating on Sagility India. It said the company's revenue and margin guidance for FY26 remains unchanged, which is a positive sign even with concerns around US Medicaid spending cuts. ICICI Securities raised its target price for the stock to Rs 60, up from Rs 56, based on a one-year forward price-to-earnings ratio of 26 times.JM Financial also holds a positive view. It said that Sagility India trades below 20 times its estimated FY27 adjusted earnings per share (EPS), making it reasonably valued. The firm has given a target price of Rs 71 for the stock.advertisement(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)
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