Sagility India Q3 FY26: Revenue up 36%, AI-led shift

Q3 FY26 snapshot: record quarter on revenue growth

Sagility reported revenue of ₹19,712 million ($122.0 million) in Q3 FY26, marking its best quarter on record. The company said revenue rose 35.7% year-on-year from ₹14,531 million in the same quarter last year. The quarter benefited from an “outstanding” Open Enrollment season, a key period for health insurance sign-ups and plan changes in the US. Management also linked the momentum to contributions from the BroadPath acquisition, which was integrated during the year. The performance stood out against a broader backdrop where many Indian IT services firms have flagged slower growth. Sagility’s business is tightly focused on US healthcare operations, which management described as structurally complex and supportive of outsourcing demand.

Where revenue came from: payers remain the core driver

Sagility’s client base is entirely in US healthcare, and management indicated 100% of clients are in that market. Within that, 87-88% of revenue is derived from Payers, with the rest from Providers. In Q3 FY26, the Payer segment revenue rose 37.3% year-on-year to ₹17,821 million. The Provider segment contributed ₹1,891 million for the quarter, up 21.6% year-on-year. The revenue mix matters because payer operations typically include claims, clinical, payment integrity, and engagement services that can be scaled across clients. The company also described cross-selling new services to existing clients as part of its growth playbook.

Margins and profitability: stable EBITDA range reiterated

Sagility said it has maintained stable EBITDA margins in the 24-25% range, supported by its operating model. Management indicated that despite scaling up during the quarter, margins held at levels similar to the previous quarter. It also guided for portfolio margins of 25% or more. Commentary from brokerages broadly aligned with this range. Motilal Oswal said it models a 24-25% EBITDA margin for FY26-28, while acknowledging potential margin risks. The company also pointed out that seasonal revenues can have a geographic delivery mix effect, with margins outside India being lower compared to delivery from India.

Guidance: FY26 revenue growth raised again

Sagility raised its FY26 revenue growth guidance to 22.5% in constant currency, up from 21%, according to the details referenced from earnings materials. ICICI Securities also noted the upgraded FY26 revenue growth guidance to 22.5% alongside a 25% margin range. Management indicated Q4 should be good compared with the prior year’s Q4, and that the full-year guidance factors in the growth seen in Q4. Separately, the company indicated that specific financial guidance was expected in May 2026 for growth projections. For investors tracking near-term triggers, guidance granularity and the cadence of deal wins are key checkpoints.

Strategy shift: moving from FTE pricing to outcome-based managed services

Management highlighted a shift away from traditional FTE (full-time equivalent) models towards outcome-based managed services and its proprietary “Synchrony” platforms. The stated objective is to align pricing with measurable outcomes and savings, rather than linear headcount-linked billing. This move is positioned as a response to industry tailwinds, including client margin compression driven by rising Medical Loss Ratios (MLRs). Higher MLRs can pressure payer profitability, increasing demand for cost reduction and operational efficiency programs. Sagility said it is proactively pursuing large outcome-based managed services deals, as also referenced by JM Financial.

AI as a “force multiplier”: automation and larger deal sizes

Sagility described AI as a “force multiplier” that can automate complex workflows and expand the scope of work. During the quarter, it rolled out 32 AI-driven use cases across 10 clients, and management commentary also referenced having deployed almost 30 use cases across 10 large clients. The company gave an example where it scaled a $1 million deal to $10 million by handling onshore work with Gen AI agents. The strategy is to capture higher-value onshore processes even as automation can reduce volumes in traditional BPO work. Management also said the company does not expect attrition to change significantly and expects to add headcount as it grows, while continuing to invest in AI.

BroadPath integration and the role of acquisitions

Sagility linked part of the quarter’s performance to BroadPath, which contributed strongly during Open Enrollment. Earnings commentary cited the BroadPath deal as a route to capture “middle and small” payer segments, expanding addressable client coverage. The company also described acquisitions as an important part of the strategy and indicated openness to more such deals, particularly in fast-growing clinical services areas. It also referenced having filled “white space” in payment integrity through acquisitions including DCI and BroadPath. In Q2 FY26, the company reported new Annual Contract Value (ACV) wins of $14 million (about ₹3,008 million), driven by consulting-led engagements and digital transformation initiatives.

Key numbers to track

Valuation and brokerage views referenced in the update

The stock was cited as trading at 19.9x forward P/E based on 2027 earnings estimates, compared with a two-year historical average of 30.3x. Motilal Oswal reiterated a ‘buy’ rating with a target price of ₹66 based on 22x FY28E EPS, and also highlighted potential upside from new logo additions, cross-selling, and BroadPath synergies. The same note referenced a revenue/EBIT/PAT CAGR of 21%/30%/24% over FY25-28. Another data point included was CMP of ₹40 alongside the ₹66 target price. While these are broker views, the key operating factors they point to are consistent: sustained growth visibility, stable margins, and scaling of AI-led delivery.

Why this quarter matters for investors

Q3 FY26 combined strong seasonal demand with structural drivers in US healthcare outsourcing. The mix remains concentrated in Payers, which aligns with Sagility’s stated focus on cost reduction services amid payer profitability pressures. The operational narrative is increasingly tied to outcome-based pricing and the “Synchrony” platform suite, with AI positioned as a way to increase deal sizes and expand into higher-value work. Near-term monitoring points include the company’s expected guidance update in May 2026, continued rollout of AI use cases, and execution on managed services contracts. The BroadPath integration and any additional acquisitions will also remain central to how Sagility sustains elevated growth rates beyond seasonal peaks.