Happiest Minds Technologies IPO Review
Couple of months back, Rossary Biotech IPO has come up that gave handsome returns to IPO investors. There is another main line IPO that is coming up now. Happiest Minds IPO would open for subscription on September 7, 2020. The company is pure digital servicing company and believes that they are positioned as “Born Digital Born Agile”. Some experts say that company is coming up for IPO wrong time during lock downs. Should you invest in the Happiest Minds Technologies IPO? What are the risk factors you should consider before investing in this Happiest Minds Technologies IPO?
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About the company
Positioned as “Born Digital. Born Agile”, they focus on delivering a seamless digital experience to its customers. It offers digital business, product engineering, infrastructure management and security services. Its capabilities provide end-to-end solution in the digital space. They believe to have developed a customer-centric focus that aims to fulfil their immediate business requirements and to provide them strategically viable, futuristic and transformative digital solutions.
Happiest Minds IPO – Issue details
Here are the issue details.
Download Happiest Minds IPO DRHP
Objects of the Happiest Minds Technologies Ltd IPO
Here are the objects of the IPO issue.
1) Offer for Sale (OFS): The object of the Offer for Sale is to allow the selling shareholders to sell equity shares held by them. The company will not receive any proceeds from the Offer for Sale.
2) Fresh Issue: Gross proceeds of the fresh issue less the Offer Expenses apportioned to Company i.e. Net Proceeds are proposed to be utilized in the following manner
3) To meet the long term working capital requirement
4) General corporate purposes
Who are the Company Promoters?
Mr. Ashok Soota is the promoter of the company.
Company Financial Performance
Here is the performance of the company in the last few years in terms of revenue and profits.
Its average EPS in the last 3 years is 3.63 and FY2020 is 7.04.
Why should you invest in Happiest Minds IPO?
Here are a few reasons to invest.
1) Happiest Minds Technologies one of the leading versatile digital business, product engineering and infra management solution provider company (claims as Born Digital – Born Agile).
2) Company revenues and margins have shown consistent growth in the last few years.
3) The company has posted higher margins for Q1 FY21 (excluding deferred tax credit + hedging). Company indicate that it is due to ongoing cost-cutting as well as a rent reduction for its staffing parks following work from home strategy. Despite covid-19 pandemic, 77%+ of their business running smoothly and yielding rewards. Company management is confident of maintaining reasonable growth in their net earnings.
4) Happiest Minds has a glass door rating of 4.1 on a scale of ‘1- 5’ (as of the end of March, 2020), among the highest for Indian IT / Technology services companies. In the Great Place to Work survey for 2019, it has been ranked fourth in IT services, in India’s Top 25 Best Workplaces for IT & IT-BPM and among India’s Top 25 Best Workplaces for Women.
Why NOT to invest in this IPO?
1) Its customers are majorly from the USA and any geopolitical conditions in the USA would have an impact to the company business.
2) The growth, which is seen in the last few years is majorly due to acquisitions and organic growth, which might not be seen in the future at that faster pace.
3) Company has incurred losses in FY2018 majorly due to lower revenues, but maintaining costs at the same level.
4) For complete internal and external risk factors, you can refer the RHP of the company.
Happiest Minds IPO Tentative Table / Schedule
How is the IPO Priced?
On the upper price band of Rs 166 and diluted EPS of Rs 5.36 for FY20, the P/E ratio works out to be 30.9x. Last 3 years diluted EPS would be low as it incurred losses in FY2018. Its peers like TCS, Infosys, LTI and Mindtree are trading in the P/E range of 24.3x to 30.3x. While it is no apple to apple comparison, one can consider this for review purpose only. Hence the asking price of Rs 166 at P/E of 30.9x is fully priced.
Also Read: List of Stocks where LIC has made 10,000 Crores profit
Happiest Minds Technologies IPO – Is it short term or long term bet?
Happiest Minds Technologies revenues and margins are consistently growing. Its issue price is fully priced. It is able to manage covid-19 crisis with less impact. Considering bright prospect’s company has, high risk investors can invest in such IPOs for medium term to long term. Investors may or may not get listing gains.
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Thanks for review.
Cancelled the application as I don’t expect allocation due to high over subscription.
Will see if it’s feasible to buy after listing.
Any IPO/Stock analysis must be considered against prevailing Indo-China border tensions and Covid-19 Pandemic.India attained second rank in covid cases world wide.
Assuming that an investor who subscribes to this ipo gets 200% listing gain,What can he do with that bounty?
You may call it a pessimistic view but I call it a realistic view.
Hello Ramakrishna, These are not something that came today and these are existing in the last 3-6 months. Is stock market considers these parameters? Answer is NO. When the world is not considering these parameters and stock markets reaching new highs keeping away fundamentals, why should we worry those parameters then? Yes I am talking about listing gains (which is immediate in less than few weeks) + long term (where covid-19 would anyways would come under control). Any ways, thanks for your comments.
Hi, Suresh jee, i am a regular reader of your blog. now i am thinking to start in invest in mutual fund
kindly suggest me some good mutual fund ( 8 to 10 % return for long time investment) to invest now . sip & lumpsum. i am not a high risk taker.
Good to hear about you Leon. Since you are moderate risk taker and expecting on an average 10% returns, you can go with balanced mutual funds for 5-10 years time frame. You can pick-up any funds indicated in this article to achieve this goal. https://myinvestmentideas.com/2020/06/top-best-balanced-mutual-funds-to-invest-in-2020-in-india/
How do you suggest this for listing gains ?
What is your suggestions?
As indicated, one may or may not get listing gains. If your sole objective is to get listing gains, you may rethink before applying for this IPO
Thanks for posting this. Could you please advise why you have considered basic EPS for P/E calculation instead on diluted EPS?
Hello Jay, No specific reason. I thought it is minor variance between both of them which his used to compare with peers P/E ratio. We can consider diluted P/E if this is significant.