Sagility Q2 FY26: Growth, Margins, Risks & Strategic Outlook
Performance Snapshot (INR Crores)
Sagility has given strong trajectory in Q2 FY26, delivering impressive growth and margin expansion:
- Revenue: ₹165.85 crore (YoY +25.2%)
- Adjusted EBITDA: ₹43.52 crore (YoY +25.6%, Margin: 26.2%)
- Adjusted PAT: ₹30.10 crore (YoY +84.0%, Margin: 18.1%)
- Organic Revenue Growth: 16.0% YoY
- Headcount: 44,185 (YoY +15.1%)
For H1 FY26:
- Revenue: ₹319.74 crore (YoY +25.5%)
- Adjusted EBITDA: ₹80.39 crore (YoY +26.0%)
- Adjusted PAT: ₹50.07 crore (YoY +62.4%)
KPI Comparison Table
| KPI | Q2 FY26 | Q1 FY26 | Q2 FY25 | YoY % | H1 FY26 | H1 FY25 | YoY % |
|---|---|---|---|---|---|---|---|
| Revenue (INR Cr) | 165.85 | 153.89 | 132.50 | 25.2% | 319.74 | 254.84 | 25.5% |
| Adjusted EBITDA (INR Cr) | 43.52 | 36.87 | 34.65 | 25.6% | 80.39 | 63.81 | 26.0% |
| Adjusted PAT (INR Cr) | 30.10 | 19.97 | 16.36 | 84.0% | 50.07 | 30.83 | 62.4% |
| Adjusted EBITDA Margin | 26.2% | 24.0% | 26.1% | — | 25.1% | 25.0% | — |
| Adjusted PAT Margin | 18.1% | 13.0% | 12.3% | — | 15.7% | 12.1% | — |
| Voluntary Attrition Rate | 26.3% | 27.6% | 25.8% | — | 26.3% | 26.7% | — |
Business Highlights
- Client Wins: $34M in new business and expansions in Q2; 5 new clients onboarded (9 in H1).
- Client Diversification: Top 3 clients contribute 63.1% of revenue (down from 66.2% last year), indicating improved diversification.
- Delivery Footprint: 34 delivery sites, up from 33 last year.
- Recognition: “Service Excellence Company of the Year” (Asia CEO Awards 2025, Philippines); Great Place to Work™ certified in India.
Financial Health
- Cash Conversion: 57.6% in H1 FY26 (lower due to higher non-cash forex gains and advance tax payments).
- Net Debt: ₹104.33 crore (down from ₹216.78 crore in FY24); Net Debt/EBITDA at 0.71x.
- DSO: 78 days (includes unbilled revenues).
- Adjusted EPS: ₹1.07 for H1 FY26 (up from ₹0.68 in H1 FY25).
Visual Infographics
1. Revenue & EBITDA Growth Trend
2. Client Revenue Concentration
3. Margin Expansion Breakdown
Drivers of Margin Expansion:
- Operational Leverage (35%): Scale benefits as revenue grows faster than costs.
- AI & Automation (25%): 25 AI-based use cases deployed, reducing transaction costs.
- Deal Construct Innovation (20%): Shift to per-member-per-month and gain-share models.
- Cost Takeout Initiatives (20%): Process engineering and analytics delivering 20–40% savings.
Risks Ahead
1. Regulatory Changes
- Marketplace Integrity and Affordability Final Rule: Stricter compliance requirements for payers could increase operational complexity.
- HIRE Act 2025: Proposed 25% excise tax on outsourcing payments to foreign entities may compress margins if passed.
2. Tariff Normalization
- Increased cost of imported medical equipment and pharmaceuticals, impacting providers more than payers.
3. Margin Pressure
- Rising compliance costs and potential tax changes could offset efficiency gains.
4. Attrition & Talent Costs
- Voluntary attrition remains high (~26%), which could lead to higher recruitment and training costs.
Impact of HIRE Act 2025
The proposed 25% excise tax on outsourcing payments to foreign entities for services to U.S. consumers could:
- Compress Margins: Increased cost for offshore delivery if passed.
- Accelerate Tech Adoption: Payers and providers may adopt automation and AI faster to offset cost pressures.
- Sagility’s Positioning: Strong U.S. citizen/green card workforce (>99%) and tech-led solutions reduce dependency on H-1B visas, mitigating risk.
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