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.

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

Registrar of Happiest Mind Technologies IPO:

  1. Kfin Technology Private Limited

Discussion on Happiest Mind Technologies IPO:

    Congratulations to all the allottees…Just book your profit and exit from this if you played for Listing Gains . My personal opinion is that if you are getting 75-80% profit then you should exit. Rest it depend upon your mindset…!!

    My take on Listing.

    1. The expected listing is around 320-330 price range. Those who have got an allotment, sell 50% on listing price and carry 50% with stop loss at 280.

    2. If it lists around 280 levels, then it is a buying opportunity for a target of 330.

    Happy Listing to allottees.

    Hey Market Wizard…I have got 0 allotment from 3 demat account of my family . Anyone please confirm whether it would have any effect that we apply higher lot or 1 lot is enough in case of over subscription…??

        Sir, from where you get this information? The information available at NSE and BSE websites differ and not comparable.

      SR. NO. CATEGORY NO OF SHARES OFFERED/ RESERVED NO OF SHARES BID FOR NO OF TIMES OF TOTAL MEANT FOR THE CATEGORY
      1 Qualified Institutional Buyers (QIBs) 1,26,87,028 98,23,12,020 77.43
      1(a) Foreign Institutional Investors(FIIs) – 26,76,52,620 –
      1(b) Domestic Financial Institutions(Banks/ Financial Institutions(FIs)/ Insurance Companies) – 31,58,63,010 –
      1(c) Mutual funds – 9,78,71,940 –
      1(d) Others – 30,09,24,450 –
      2 Non Institutional Investors 63,43,513 2,22,95,01,690 351.46
      2(a) Corporates – 33,22,97,640 –
      2(b) Individuals(Other than RIIs) – 1,83,77,98,020 –
      2(c) Others – 5,94,06,030 –
      3 Retail Individual Investors(RIIs) 42,29,009 30,00,13,740 70.94
      3(a) Cut Off – 22,50,59,040 –
      3(b) Price bids – 7,49,54,700 –
      – Total 2,32,59,550 3,51,18,27,450 150.98

    Why is the QIB subscription so low? A lot of shares have been set aside for them, but so far only 8% have been booked.

      Normally majority of QIBs will subscribe on the 3rd (closing) day. Let us see the status tomorrow. If QIB quota is not fully subscribed then the listing may be at a discount.

    Can a person make 5 applications (different names/PAN) via ASBA through a third party bank account?

    sebi allows 5 applications. But strangely, in the RHP, I saw “DO NOT SUBMIT MORE THAN ONE BID CUM APPLICATION FORM PER ASBA ACCOUNT”

      Ive heard that this is because of Sebi rules since company hasn’t been profitable in last 3yrs it seems…

    Happiest Minds IPO from 7-9th Sept. Founded by Ashok Soota. Under him Wipro IT Rev jumped from 7 cr to $500m from 1984-1998 .Co founded Mindtree in 1999,did its IPO in 2007, subscribed 103X and now Happiest Minds which has hit Rev of Rs 720 cr

    In the first quarter of Q1FY21, Happiest Mind has clocked a revenue of 186 Crores and 50 Crores of PAT.

    Annualized PAT for FY20 = ~70 Crores.

    Annualized PAT for FY21 = ~200 Crores.

    Total Shares after IPO = 14,68,63,556

    EPS (FY20) = 4.76
    EPS (FY21) = 13.61

    IPO Price = 166

    GMP = 115

    Listing Price expected = 281

    P/E ( at listing based on FY20)= 59x

    P/E ( at listing based on FY21)= 21x

    A fresh issue of up to [●] equity shares aggregating up to ₹110 Crores and an offer for sale of up to 8,414,223 equity shares.

    Very good IPO to apply. Ex. Mindtree promoter-driven company.