Happiest Minds IPO

Happiest Minds IPO Details

Happiest Minds Technologies Ltd. received the go-ahead to launch an IPO in August from SEBI in order to raise Rs. 7,000 mn. The Bengaluru based company has come forward as a strong brand in the IT and Digital Service industry with a scalable business model and multiple drivers for steady growth.

• The IPO Issue is a combination of Fresh (Rs. 1,100mn) and Offer for Sale (Rs. 5,884.5 - 5,920.2mn).
• The total Issue Size is 42.290 - 42.330mn shares (Rs. 6,984.5 - 7,020.2 mn).
• The issue is through a book-building process with the price of Rs. 165 - Rs. 166 per share.
• The offer represents around 28.8% of its post-issue paid-up equity shares of the company.

Happiest Minds IPO Review/Ratings

1. Global technological spend is estimated to grow by 6.3% CAGR over 2019-25, from USD 4.2tn in 2019 to USD 6.1tn by 2025. During this period, legacy IT services are likely to grow by 2.1% CAGR, while digital services are estimated to grow by 20.2% CAGR.
2. Peer Comparison and Valuation - At the higher price band of Rs. 166 per share, their share is valued at a P/E multiple of 29.4x (to its restated FY20 EPS of Rs. 5.6), which is at a premium to peer average of 25.9x.
3. The issue seems to be fully priced as compared to its domestic peers. The company has earned an average 97.1% of the revenue from digital IT services as compared to its domestic peers, which earned in the range of 30-50%. Thus, the company cannot be fully comparable to domestic peers.
4. There are international peers, who derive almost all of their revenue from digital services, trading at a P/E multiple ranging from 67-139x. Assuming the valuations of these companies in the US markets are frothy, the valuation demanded by Happiest Minds seems to be attractive.
5. They have been growing high revenue-generating customer accounts, have multiple drivers for steady growth and strong R&D capabilities.
6. A cause of concern, however, would be the subdued economic growth, intense competition and unfavourable movement in forex rates.

Download the Happiest Minds IPO Report

Happiest Minds IPO Fundamental Analysis

• Net Profit increased from Rs. 142.1 crore in FY 19 to Rs. 717.1crore in FY 20.
• Revenue Growth for FY 20 = 18.3% from 5903.6 mn in FY 19 to 6982.10 mn in FY 20.
• Over FY18-20, the company derived a majority of the revenue from the USA (around 75.5%). This is followed by India (around 11.8%) and the UK (around 9.4) markets. Currently, it is focusing on growing business from the European markets.
• In FY20 and Q1 FY21, the company derived 96.9% and 96.3% of its revenue from digital IT services.
• Return on Equity (ROE) for FY 20 = 22.1%
• Return on Assets (ROA) for FY 20 = 16.3%
• Debt to Equity Ratio (D/E) for FY 20 = 0.2%
• Earnings Per Share (EPS) = 5.6
• Price to Earnings Ratio (P/E) = 29.4
• Price to Book Ratio (P/B) = 6.5
• After this issue, the promoter stake will decrease from 61.77% to 53.25% and public shareholding will increase from 34.16% to 42.86%.

Online Procedure to Apply For Happiest Minds IPO

1. Go to the IPO Section => IPO Listing => Open IPO.
2. On tapping Happiest Minds IPO, you can directly click on Subscribe to apply or even view the IPO details.
3. On the Subscribe Screen/Page, you will be required to enter the number of lots, cut-off price, UPI ID and tap Verify.
4. Once you select ‘Subscribe’. Your bid will be executed.
5. You can check the status of your IPO bid in the IPO Transactions section.