Happiest Minds Technology

Primary business of the Company

Positioned as “Born Digital. Born Agile”, we focus on delivering a seamless digital experience to Their customers. Their offerings include, among others, digital transformation, product engineering, infrastructure management and security services. Their capabilities provide an end-to-end solution in the digital space. We have developed a customer-centric focus that aims to provide them strategically viable, futuristic and transformative digital solutions. We offer solutions across the spectrum of advanced digital technologies such as Robotic Process Automation (RPA), Software-Defined Networking/Network Function Virtualization (SDN/NFV), Big Data and advanced analytics, Internet of Things (IoT), cloud, Business Process Management (BPM) and security.

Incorporated in 2011 by Primary Promotor Mr. Ashok Soota (Spent early years of his career with the Shriram Group of Industries in India in 1965. He served as President of Wipro Infotech from 1984 to 1999. Under his watch, Wipro’s IT business grew from US$2 million in 1984 to a US$500 million run-rate in 1999.

Soota co-founded Mindtree in 1999 which has currently a revenue of US$1 Billion, has an approximate of 20212 employees, and offices across the Americas, Europe and Asia)

The business of the company is divided into three categories; Digital Business Service (DBS), Product Engineering Service (PES) and Infrastructure and Management Security Service ( IMSS).

The DBS unit offers digital application development & modernisation, assistance in designing & testing of operations, management of the platform, consulting and domain led offerings.

PES unit helps by transforming the potential of digital by making the product secure and smart. Wherein, IMSS provides an end to end monitoring and management capability for applications and infrastructure of the clients.

As of June 30, 2020, Happiest Minds had 148 active customers and has a global presence in countries like US, UK, Australia, Canada and the Middle East. The business units of the company is assisted by the 3 Centres of Excellence which are Internet of Things, Analytics / Artificial Intelligence, and Digital Process Automation. In Fiscal 2020, 96.9% of the company’s revenues came from digital services which is one of the highest among Indian IT companies.

Happiest Minds delivers services across industry sectors such as Retail, Edutech, Industrial, BFSI, Hi-Tech, Engineering R&D, Manufacturing, Travel, Media and Entertainment.

Competitive Strengths

Focused on software product development
2. Strong Brand in offering Digital IT services
3. End to End digital lifecycle
4. Agile Engineering and Delivery

Company Financials:

Summary of financial Information (Restated)
Particulars For the year/period ended (₹ in Million)
30-Jun-20 31-Mar-20 31-Mar-19 31-Mar-18
Total Assets 5,730.8 5,081.5 4,135.2 3,869.9
Total Revenue 1,869.9 7,142.3 6,018.1 4,891.2
Profit After Tax 501.8 717.1 142.1 (224.7)

Objects of the Issue:

The company proposes to utilise the Net Proceeds from the fresh issue towards funding the following objects:

  1. To meet long term working capital requirement; and
  2. General corporate purposes

Happiest Minds IPO Details

IPO Date Sep 7, 2020 - Sep 9, 2020

Happiest Minds IPO Promoter Holding

Pre Issue Share Holding 61.77%
Post Issue Share Holding 53.25%

Happiest Minds IPO Offer Size by Investor Category

The Percentage of Offer Size available for Allotment/allocation:

  • QIBs : 75%
  • Non-Institutional Investors : 15%
  • Retail Individual Investors : 10%

Risks to Investors in Happiest Minds IPO

  • The two book running lead managers associated with the Offer have handled 11 public issues in the past three years out of which 5 closed below the issue price on the listing date.
  • The average cost of acquisition for the Promoter Selling Shareholder is ₹34.68 and the Investor Selling Shareholder is ₹24.91, and the offer price at the upper end of the price band is 166.
  • The PE ratio based on diluted EPS for Fiscal 2020 for the Issuer at the upper end of the Price Band is as high as 31.0 as compared to the average industry peer group PE ratio of 26.9.

Happiest Minds IPO Subscription Status (Bidding Detail)

Few Attributed Risks for the business I found are as follows. Request experts to add to it if any missing.

Their revenues from operations are highly dependent on customers located in the United States. Worsening economic conditions or factors that negatively affect the economic conditions of the United States could materially adversely affect their business, financial condition and results of operations.

  • Their business analogy is that once they gain a client, they try to get related data about other projects in same/ other digital technologies and make relevant efforts to gain ( try to grow more inside the same client and thereby establish long term relationships as well).
  • Although they are 100% digital theme focussed, that doesn’t mean other behemoths like TCS, Infosys etc. are not focussing on these. Being from the same field, I have first-hand knowledge that they have already been trying to procure relevant IT professionals , retrain the existing ones and showing prototypes to their current clients thereby gaining those businesses too.)
  • Although we hope Mr. Askok Soota remains healthy and lives very long, but in any unfortunate case, the clarity on some dependable heirs is quite blurry.

My view on this is summarised as:

“100% digital business focussed IT services company which builds on very new and future yet continuous growing skills, having a very experienced and successful promotor backing. If it continues to grow, diversify geographically and make profitable acquisitions, this could be an interesting journey to be a part of.”


Disc: Invested Post IPO.


EBITDA margin of 21-23% as a sustainable range: Happiest Minds


Another acquisition that looks to add in the core business area.
“Happiest Minds acquires US based Pimcore Global Services to
strengthen its presence in digital commerce”


Amazing Q3 performance. Now the company is planning to use cash in range 10-30 million for acquisition purposes in similar niche digital areas .


On March 24, Happiest Minds Technologies, a ‘Born Digital. Born Agile’, digital transformation and IT solutions company announced that along with Alyne, it has delivered a digital transformation platform for Cutover UK, a leader in Work Orchestration and Observability.

As part of this project, Happiest Minds will automate SOC 2 Type 1 Compliance which will enable Cutover with a competitive advantage as a SaaS provider and provide greater assurance to their customers, demonstrating their commitment to Cyber Security trust principles.

Last month, rating agency India Ratings and Research (Ind-Ra) upgraded Happiest Minds Technologies Limited’s (HMTL) long-term issuer rating with positive outlook.

The upgrade reflects a substantial increase in HMTL’s operating EBITDA margins in 9MFY21, coupled with a healthy cash flow from operations and initial public offering (IPO) proceeds, leading to a significant improvement in the credit metrics and liquidity position. The Positive Outlook reflects Ind Ra’s expectation of a continued improvement in financial performance in FY22; however, the EBITDA margins would marginally decline but would remain strong, Ind-Ra said in rating rationale.

Ind-Ra expects the margins to remain at similar levels during 4QFY21-1QFY22 and reduce from 2QFY22, following the normalisation of operations which will lead to an increase in the operating costs. Hence, the EBITDA margins in FY22 would be lower than FY21, although remain strong. Moreover, the company expects the revenue growth in 4QFY21 to remain at similar level as 9MFY21, which will be supported by an inorganic growth from newly acquired US-based Pimcore Global Services (PGS) in February 2021, it said.


Revenue Growth CAGR of 18% for past 4 years. Increasing utilization/ employee. EPS grew from 5.36 to 11.45. A very good quarter from the company.

Recommended a final dividend of Rs. 3


@vibhor_vaish Could you pls put some light on the exceptional item because of which they had a hit on their Q4’ 2020 PBT? What exactly was that due to? Sorry i seemed to not find it during my quick scan through of results. I think it was worth INR 11.26 Crores. In their note to exchanges, they have mentioned it as Impairment loss. I am not sure I have gone to the right granularity

@ameydesai As per note 9: “The Group was carrying a Goodwill of Rs. 1,887 lakhs relating to the business acquisition from OSS Cube Solutions Limited. During the year ended March 31, 2020, the Group had recognised an impairment loss of Rs. 1,126 lakhs”

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the most common sentence I heard in the Conference call was the EBITDA Margins were affected due to Wage hikes and decrease in other income.
The company added around 528+ employees during FY21

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A sky look on the sector as a whole will reveal that most of these IT companies, which have not given hikes in decades and were paying labor salaries have changed their decade long trend and given near double digit hikes due to heightened attrition (this is a huge thing as per my pov). Since this company operates in already niche skills , they have to pay above and more to retain and hire more. To me , this was not too much surprising and one thing I loved was they refused to reveal order book and pipeline numbers which are used to fool investors. These numbers span a couple of years and are not related directly to current quarter/fiscal year too much. One thing we shouldn’t miss the cash balance they have on hands despite paying 44 cr in dividends. Looking for more tasty organic growth.

Disc: Invested and looking to add more when others sell :yum:

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The company may be very good, but how do we justify valuation at PE of 70, for a business likely to grow at 20% CAGR.


On a broader note, as per my experience, PE valuations become cheap when growth keeps on coming. I have regretted not buying high growth and margin businesses when they appeared “expensive” and entered at much “higher” PE’s later on. Also, it’s rare to find top class management. Just my two cents.


Another very informative video from SOIC.

Additionally YOY:

  • Product Engineering Services led the
    growth by registering a 7.9% growth,
    followed by Digital Business Services and
    Infrastructure Management & Security
    Services at 6.4% and 2.7% respectively.

  • Company added nine new billion-dollar
    corporations as customers and three
    customers in its US$5 Mn – US$10 Mn

  • On PAT, we closed the year with
    162.4 crores, a growth of 127% over
    the previous fiscal. Our Return on Capital
    Employed (RoCE) was 31%; Return on
    Equity (RoE), 30%; Free Cash flows for
    the year was strong at 215 crores
    which is 99% of EBIDTA.

  • Client profile of 46 Fortune 2000 / Forbes 200 /
    Billion $ clients and a 87% repeat business

My Fav :slight_smile:


Reason why tata elxsi, happiest minds kind of product engineering stocks going up. Big deals are happening in this space.

Jain said the EPAM effect is particularly visible in the valuation of three India - centric engineering service providers - GlobalLogic, Persistent, and Happiest Minds.

Disc - invested


Latest annual report

Transcript Of 10Th Annual General Meeting Held On July 07, 2021

Coming to drones, as you would be aware we have been chosen by the Government of India to help them build the platform to register, manage and monitor drone traffic in India and we think this is the very important project that we have taken up and as you have again pointed out helps with the security of the country.


Very relevant for 100 PE stock … Taxation will increase in coming years

Our effective tax rate has moved up from 2.6% in FY 19 (the year before last) to 12.7% in FY 21 and should be in the range of 22%-24% from FY 22.


Taxation concern has played out in this quarter …

EPS has reduced from Rs 3.51 to Rs 2.51 ( annualised EPS is now is 10 )

Rs 1350 for EPS of 10 ie PE of 134 for declining EPS stock is crazy …

There is similar pattern across many Midcap IT … It is time to log out and enter large cap IT …

It is 100% Digital company but growing just @ 25%

whereas Infosys inspite of size Digital is growing @ 46% … Crazy Valuation gap between Largecap and Midcap inspite of performance otherwise


Strong Quarterly performance

  • Firstly it’s YoY and QoQ revenue growth is in top percentile of IT pack.10% QoQ and 40% YoY growth.

  • Q1 22 had exceptional item of 6 Cr( valuation diff of recent acquisition) - outside that PAT will be 41 cr, annualized with range of 180 - 200 cr+ in FY22 at current run rate. Current market cap is 20K cr. As long as hyper growth 30-40% is visible market tends to assign high PEs. Remember they are also going to continue to do inorganic growth as well.

  • One needs to look at type of wins they have called out - they are cutting edge new generation tech and digital solutions and use cases across industries. These differentiate them from rest of pack.

Wins in Qtr

  • Biggest advantage for them is low base and full digital focus - they can continue to deliver very high growth for long time, looking at their clients mix and presence in $billion+ enterprises- growth runway is long, added 18 clients in quarter and are at 180 clients base now, out of them 53 are $billion+ size clients - imagine hardly 4-5 cr revenue per customer currently, account mining results will show in coming years as they are relatively young and has foot in the door for over 180 clients

  • Company Net Profit margin is highest quartile in segment compared to peers, at approx suub 20% NPM even after full tax rates.( Tata elxi has similar margin profile)

Again valuations are no doubt demanding, high growth companies have that in common


  • Growth outlook = 20% CAGR for longer term + Inorganic(e.g. PGS acquisition)
  • current revenue/customer is $750000, key internal metrics to grow
  • 310 folks added - 10% of billable workforce, expect for similar growth for next Qtr
  • IP revenue at 10%, will give consulting revenue( upstream value chain work) starting next Qtr
  • 600 + cr cash on books
  • Demand outlook robust
  • Near term EBDITA of current qtr doable - 26%+
  • Hired dedicated account managers as well as vertical heads - Combined synergy gets larger deals closed
  • Demand better than expectations- e.g. IMS deals are growing in size and becoming annuity deals, Security deals getting larger and have managed services additions and so on
  • Fixed price project proportions going up with annuity deals( 22 to 26%)
  • Already have consulting skills like EPAM and other competitors, which are essential in business transformation type projects- will highlight from next Qtr
  • PGS revenue grew by 50% QoQ by cross selling - $2M run rate becoming $3M

All in all strong commentary, hiring backed pipeline and long term vision with execution strategy

Invested from lower levels

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can you pls let us know this is happening across which other midcap IT ? I thought this is Happiest mind specific issue…? Thanks

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