Happiest Minds Technologies’ net profit jumps by 57% in Q1 FY23.
Happiest Minds recorded net sales of Rs. 328.92 crores in June 2022 compared to Rs. 244.61 crores in June 2021. The net profit stood at Rs. 56.34 crores in Q1 FY23, up by 57.68% sequentially at Rs. 35.73 crore because of lower other income. The free cash flows were recorded at Rs. 86.39 cr. The service business was driven primarily by Edu-tech, contributing 23.7%, BFSI, contributing 13.7%, and industrials, at 8.2%. Digital infrastructure/Cloud, AI/Analytics and SaaS had a contribution of 45%, 11.6%, and 21.5%, respectively.
EPS stood at Rs. 3.96 in June 2022, up from Rs. 2.51 in June 2021. EBITDA stands at Rs. 87.75 crore, up 32.65% from Rs. 66.15 crore YOY. The reported operating margin stood at 22.7% QoQ, down by 30bps due to lower utilization. 97% of the total revenue comes from digital business, and 93% is contributed by Agile. Europe and the USA witnessed positive growth on a QOQ basis, with healthy pipelines in digital services. 90% of the total revenue was repeat business. The IT tech added 5 new clients and now has 211 active clients in total. The smaller accounts of non-top 10 clients did well and contributed approximately 57.1% of the total revenue. The firm was able to increase business from existing clients while also adding two new clients to the Fortune 2000/Forbes 200 billion dollar corporation.
In the concall, the IT firm mentioned that 15% of the total revenue was from the new business and the remaining came from the existing operations. One of the large clients was cautious in the last quarter but has shown interest in investing more in its new features in the product platform. The firm intends to hire more than 500+ freshers and around 300+ will be joining by August 2022. Happiest Minds will continue to invest in new technology and maintain an EBITDA of 22% to 24% in the coming period. The management believes that they will maintain a CAGR of 25% over the next five years. They are optimistic about their future opportunities and focus on the annuity business. The management expects a multi-year tail wind in digital technologies, multi-hybrid cloud and automation.
We believe that the recent intake of freshers, constant investments in skill addition, currency depreciation, along with supply side challenges, wage hikes, increasing subcontracting costs, and higher intake will keep margins under check in the near term. The stock is currently trading at Rs.974.55, down by 24.05 points, or 2.41%. The stock touched a 52-week high of Rs.1568.00 and a 52-week low of Rs.785.60. The Bangalore-based firm’s market cap is at Rs.14258 crores.
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