Happiest Mind Technologies IPO

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(i) Positioned as “Born Digital. Born Agile”, the happiest mind focus on delivering a seamless digital experience to the customers. The offerings include digital business, product engineering, infrastructure management, and security services.

(ii) Happiest Mind provides end-to-end solutions in the digital space. They also offer solutions across the spectrum of various 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.

(iii) In Fiscal 2020, 96.9% of the happiest mind revenues came from digital services. This is one of the highest among Indian IT companies (Source: Frost & Sullivan Report). The Frost & Sullivan Report notes that the legacy IT market as a percentage of total technology spend is estimated to decline from 85.7% share in 2019 to 65% share by 2025, with digital spend making up the remaining 35% share by then. The Frost & Sullivan Report estimates the global digital services market of USD 691 billion in 2019 to grow at a CAGR of 20.2% to USD 2,083 billion by 2025.

(iv) As of March 31, 2020, the Happiest Mind has 157 active customers. The repeat business (revenue from existing customers) has steadily grown and contributed a significant portion of our revenue from contracts with customers over the years indicating a high degree of customer stickiness.

(v) In Fiscal 2020, they delivered 87.9% of the projects through the agile delivery methodology. Over the years and currently, during the ongoing outbreak of Novel Coronavirus, they have successfully implemented business continuity plans including to achieve efficient work-from-home practices to ensure connectivity across the enterprise.

(vi) In the Great Place to Work® 2019 survey, Happiest Mind was ranked among India’s Top 25 Best Workplaces for Women. They have also received a great place to Work® Certification. As of March 31, 2020, they had a Glassdoor rating of 4.1 on a scale of ‘1-5’, among the highest for Indian IT services companies(Source: Frost & Sullivan Report).

Objects of the Happiest Mind Technologies IPO:

The Offer comprises the Offer for Sale and the Fresh Issue. Offer for Sale = 592 Crores The Company will not receive any proceeds from the Offer for Sale. Fresh Issue = 110 Crores The Net Proceeds from the Fresh Issue will be used towards funding the objects to meet long term working capital requirements.
DRHP of Happiest Mind Technologies IPO
RHP of Happiest Mind Technologies IPO

Happiest Mind Technologies IPO Details:

Open Date: Sep 07 2020
Close Date: Sep 09 2020
Total Shares: 42290091
Face Value: ₹ 2 Per Equity Share
Issue Type: Book Building
Issue Size: 702 Cr.
Lot Size: 90 Shares
Issue Price: ₹ 165-166 Per Equity Share
Listing At: NSE,BSE
Listing Date: Sep 17 2020

Promoters And Management:

Ashok Soota, the Promoter, Executive Chairman, and Director has several years of experience in the IT industry. Prior to founding Happiest Mind, Mr. Soota was associated with Wipro Limited as its Vice Chairman and Mindtree Limited as its Chairman and Chief Executive Officer. He has been conferred with a Dataquest IT Man of the Year, 2017, a Dataquest Lifetime Achievement Award for outstanding contribution in organizing and building the Indian software industry, and IT Lifetime Achievement Award from the Financial Express, and a lifetime Achievement Award from Chiratae Ventures (formerly known as IDG Ventures).

Financials of Happiest Mind Technologies IPO:

(Financials in Crores) 1). Profit and Loss Analysis :
Year Revenue EBITDA OPM PAT  NPM Shares F.V. EPS
2018 489.12 7.62 1.56% -22.47 -4.59% 9.57 2 -2.35
2019 601.81 66.28 11.01% 14.21 2.36% 9.57 2 1.48
2020 714.23 113.12 15.84% 71.71 10.04% 10.79 2 6.65
CAGR 20.84% 285.29%
2). Balance Sheet Analysis :
Year Long-Term Debts Short-Term Debts Total Debt NW Debt/NW RONW CE ROCE
2018 14.83 68.55 83.38 -108.88 -0.77 -20.64% -41.56 -31.59%
2019 8.50 60.12 68.62 -66.05 -1.04 -21.51% -18.51 -224.20%
2020 1.32 69.16 70.48 265.31 0.27 27.03% 296.49 31.33%
3). Cash Flow Analysis :
Year Current Assets Current Liabilities Current Ratio CFO Capital Exp FCF
2018 277.89 428.55 0.65 10.34 1.13 9.21
2019 333.99 432.03 0.77 57.62 0.79 56.83
2020 445.14 211.66 2.10 112.22 0.46 111.76
IZ Analysis: 1. Happiest Mind has clocked a revenue of 186 Crores in the Q1FY21. And overall revenue growth has been tremendous in the last 3 years. 2. Happiest Mind EBITDA margins have improved from just 1.55% in FY18 to 25% in the Q1FY21. Excellent growth. 3. Debt on as 30.06.2020 stands at 90 Crores. And Net-worth of 319 Crores. So, the Happiest Mind has comfortable D/E. 4. EPS (annualized FY21)= 13.85 5. P/E = 11x

Comparison With Peers:

Happiest Mind has shown Infosys, TCS, and Mindtree as its peers. Infosys, TCS, and  Mindtree are currently trading at P/E of 23x, 27.51x, and 26.18x respectively.

Recommendation on Happiest Mind Technologies IPO:

Review and Recommendation of InvestorZone are 5/10. 1. Excellent Management- Happiest Mind is promoted by Ashok Soota, the Promoter has several years of experience in the IT industry. Prior to founding Happiest Mind, Mr. Soota was associated with Wipro Limited as its Vice Chairman and Mindtree Limited as its Chairman and Chief Executive Officer. 2. The company has shown excellent growth in the last 3 years. Moreover, the covid-19 impact is seen less in the IT and Pharma sectors. 3. The current offering is at P/E of 11x on annualized FY21 earnings. 4. The listing gain of 40-50% is expected. Subscription Details
Day QIB NII Retail Total
1st Day 0.08x 0.62x 14.61x 2.87x
2nd Day 6:00PM 0.47x 3.96x 38.55x 8.40x
3rd Day 77.43x 351.46 70.94x 151x

Lead Manager of Happiest Mind Technologies IPO:

  1. ICICI Securities Limited
  2. Nomura Financial Advisory And Securities (India) Private Limited

Registrar of Happiest Mind Technologies IPO:

  1. Kfin Technology Private Limited

Discussion on Happiest Mind Technologies IPO:

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