KR Choksey has given Buy recommendation for Happiest Minds Technologies with a target price of Rs. 1158 in its research report issued on Oct 21, 2022

KR Choksey’s research report on Happiest Minds Technologies

Happiest Minds Technologies Limited (HAPPSTMN) Q2FY23 performance is marginally lower than our estimate. Dollar revenue was up 5.0% QoQ to USD 44.3Mn and rupee revenue grew by 8.1% QoQ to INR 3,555Mn (up 5.7%/26.5% QoQ/YoY in constant currency, 9 straight consecutive quarters delivering +5% QoQ growth in topline). Reported operating margin during the quarter was 22.7%, flattish QoQ. Reported net profit grew by 5.5% QoQ to INR 594Mn (KRChoksey est. INR 614Mn) with margin of 16.7%. 97% of the total revenue comes from Digital business and Agile contributes +93% of the total revenue. We believe that recent intake of fresher (September intake), continuous investments in facility addition across India especially in Bangalore, Noida & Bhuvneshwar along with marginal improvement in supply side, lower subcontracting costs which will be partially offset by wage hike & higher intake of fresher (drag the utilization rate down) will keep margins under check in the near term. Growth was broad based across the US (Contri.|67.9%, up by 7.0% CC QoQ) and Europe (Contri.|16.1%, up by 58% CC growth). Digital infrastructure/Cloud (Contri.|45.4%, up 4% CC QoQ growth), AI/Analytics (Contri.|12.8%, up 15.7% CC QoQ growth) and SaaS (Contri.|21.3%, up 3.7% CC QoQ growth).Our target price of INR 1,158 is based on ~63x Mar-24E EPS with EPS CAGR of 22% over FY22-24E.


Happiest Minds is currently trading at a valuation with a P/E multiple of 61.5x/54.8x on FY23E/FY24E earnings. We expect strong deal momentum across verticals, full focus on digital business especially in analytics and cyber security segment along with clients centric approach will aid growth over the medium to long term in future. We maintain our target price to INR 1,158 based on a P/E multiple of 63x to the FY24 estimated EPS of INR 18.4 and hence we maintain our target price with “BUY” rating.

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