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Happiest Minds Technologies Ltd IPO

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Happiest Minds Technologies Ltd. (HMTPL), is a relatively younger IT solutions provider (Incorporated in FY11) which was born digital and has specialization in disruptive technologies. It offers services like Software and Infrastructure as a Service, Security, Analytics, and IoT. As on FY20, its Product Engineering Services (PES, 50.5% of revenue) was the largest BU while Edu-Tech and Hi-Tech are the largest verticals accounting for ~21% of revenue. HMTPL’s promoter, Mr. Ashok Soota, was the Founding Chairman and Managing Director of Mindtree and played a significant role in the evolution of Mindtree.
Issue Details
The Offer comprises of the Fresh Issue (~0.66 Cr shares / Rs110cr) and the Offer for Sale (~3.57 Cr shares). Net Proceeds are proposed to be utilized for L.T. working capital needs and general corporate purposes

Happiest Minds Technologies Ltd IPO Subscription Details

Company

Happiest Minds Technologies Ltd

Issue Type

OFS & fresh Issue

Issue Size (In ` Crore)

₹702 (at upper price band)

Lot Size

90 Equity shares

Open Date

07 Sep

Close Date

09 Sep

Offer Price

₹165 to ₹166 per equity share

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Financial summary:

Consolidated Rs Cr

FY18

FY19

FY20

1Q FY21

Revenue

463

590

698

177

EBIT (%)

(8.5)

5.1

11.0

18.5

Adj. Dil. EPS (Rs)

(3.1)

2.2

6.2

3.7

PE(x)

--

75.5

26.8

--

ROE (%)

--

--

27.1

--

Source: RHP, 5paisa Research, Note: P/E is on upper end of price band on; only FY20 net worth used to calculate RoE for Happiest Minds

Key Points

Diversified industry exposure and customer stickiness
HMTPL has a diverse customer industry group with no particular vertical contributing to more than 25% of the overall revenues. More importantly, Edutech and Hitech combined account for ~42% of overall revenues and are expected to be less impacted in the current environment. The company is clubbing Travel, Media and Entertainment (17% of FY20 revenue) industries while reporting its vertical numbers in the RHP which hints at lower impact on overall business from Travel clients. Having a diversified exposure augurs well from client and industry concentration perspective. As for client contribution, the company derives a significant portion of its revenues from a small number of customers. Its number of active customers have declined from 173 in March 2018 to 157 in March 2020. This increase in revenue per customer points at steady account mining, high level of customer stickiness and superior sales productivity.
Solid promoter reputation and track record
Mr. Ashok Soota, the Executive Chairman and Director of HMTPL is an industry veteran and has experience in building/running successful IT companies/BUs. He was the Founding Chairman and Managing Director of MindTree Ltd., a company that was “Born Digital” and was able to reach ~USD400 Mn in a relatively short span of time, before him stepping down. Companies like Hexaware and Persistent which nearly had a decade head start (vs. MindTree) had only reached USD200-300 Mn at that time. HMTPL is already up to USD100 Mn mark in a short period of time. He was the vice chairman of Wipro and senior vice president of Shriram Refrigeration Industries prior to co-founding MindTree.
Recent Performance
In 1QFY21, Happiest Minds reported flat INR revenue on a YoY basis (8% decline YoY in US$ terms), with minimal exposure to the travel vertical. Margin performance was more impressive, with EBIT margin standing at 18.5%. For the full year FY21, management is looking to improve its EBITDA margin to 21-22% (18-19% EBIT). Its carried forward tax losses will get exhausted in FY21 and management has guided for an ETR of 25% from FY22.
Key Risk Factors: Geographic concentration:
United States alone contributes 77.5% of its overall revenues (FY20). Anti-outsourcing legislation, if passed, would a pose a threat owing to higher onsite ratio and /or insourcing by customers. Client concentration risk: Although not quantified, the RHP alludes to higher contribution of revenues from a small number of clients. Loss of a key client and lower quantum of repeat business from existing clients can impact the revenue and earnings growth.

How to apply IPO on 5paisa app?

  • Login to your 5paisa Mobile Trading App
  • Click on Trade & select IPO section
  • Select Happiest Minds IPO
  • Enter the number of lots and price
  • Enter your UPI ID and click on submit
  • Your bid will be placed with the exchange
  • You will receive a notification to block funds in your UPI app
  • Approve the block request

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Contact Details of Happiest Minds Technologies Ltd IPO

Company Contact Information

Happiest Minds Technologies Ltd IPO
3rd & 4th Floor SJR Equinox,
SyNo 47/8 Doddathogur Ele.City,
Bangalore, Karnataka 560100.

Phone:
Email:

Happiest Minds Technologies Ltd IPO Register

KFin Techologies Pvt Ltd

Happiest Minds Technologies Ltd IPO Lead Manager(s)

  • ICICI Securities Ltd
  • Nomura Financial Advisory & Sec. (India) Pvt Ltd

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