Happiest Minds Technologies Ltd. share price target

Happiest Minds (HAPPSTMNDS) reported 25.6% YoY CC growth in FY25, lower than its guidance of 27-28%. Organic growth for FY25 stood at ~3.2% as per our estimate.

Happiest Minds (HAPPSTMNDS) has once again revised down its FY25 revenue target to 27-28% vs 30-35% YoY CC earlier. We cut revenue by 7%/9% for FY26-27E, factoring in lower organic growth momentum and softness in edutech.

Happiest Mind’s (HAPPSTMN) operating performance undershot estimates with both margin and revenue missing their marks.

Given the company's strong growth potential backed by robust deal wins and superior execution capabilities, we recommend a BUY rating on the stock.

Given the company's strong growth potential backed by robust deal wins and superior execution capabilities, we recommend a BUY rating on the stock.

Recommendation: Given the company's strong growth potential backed by robust deal wins and superior execution capabilities, we recommend a BUY rating on the stock.

we initiate coverage with a BUY rating and a Target Price of Rs 1,100/share, offering an attractive upside of 22% from the CMP.

Happiest Minds (HM) reported in-line revenue growth of 3.6% QoQ CC (vs I-SEC: 3.5%) and 11.6% YoY CC in Q2FY24 led by healthy growth in product engineering services (5.2% QoQ USD) and digital business solutions (3.7% QoQ USD). Infrastructure management and security solutions’ revenue declined 2.5% QoQ USD and has been flat over the last six quarters.

Happiest minds (HM) reported 3.6% QoQ USD, 3.5% QoQ CC, revenue growth, slightly lower than our estimate of 4% QoQ CC. On a YoY basis, growth was 12.7% YoY USD (7% organic). EBIT margin came in at 19.2% (-175bps QoQ), below our estimate of 21.1% due to higher employee costs attributable to slight increase in onsite employee mix and campus joinee related costs.

As per HM management, the areas on which HM is working for its clients are non discretionary in nature. HM is working on core part of clients’ technology which the clients use to deliver their services or engage with their customers, or provide services
to their employees.

We initiate coverage on Happiest Minds Technologies (HAPPSTMNDS) and assign an
ADD rating with a DCF-based target price of Rs1,075, assuming 25% revenue CAGR over FY22-FY32E, 20% EBIT margin, terminal growth rate of 6.5% and WACC of 11.5%.