Happiest Minds makes stellar debut, shares soar 123% against issue price

ASHOK SOOTA, Executive Chairman Happiest Minds
Shares of Happiest Minds Technologies (HMT) made a stellar debut at the bourses on Thursday as investors' money more-than-doubled after the stock ended at Rs 371, a 123 per cent higher against its issue price of Rs 166 per share on the bourses. During the session, the stock hit a high of Rs 395, up 138 per cent against the issue price. 

The stock listed at Rs 351, a 111 per cent premium against its issue price on the BSE.

On the National Stock Exchange (NSE), shares hit a high of Rs 389.90, after opening at Rs 350.

The Rs 702 crore initial public offering (IPO) of HMT had received strong response from all catergories of investors. The public offer of the Ashok Soota-led company was subscribed 150.98 times. It generated bids worth more than Rs 58,000 crore, one of the most-subscribed maiden share offerings in recent times.

The IPO received bids for over 3.51 billion shares against the offer size of over 23 million equity shares, data available on the exchanges showed. The portion of share sale reserved for retail investors was subscribed 70.94 times, while those reserved for non-institutional investors and qualified institutional buyers were subscribed 351.46 and 77.43 times, respectively.

HMT is a digital IT and product engineering service provider that positions itself as “Born Digital. Born Agile”. The company focuses on delivering a seamless and end-to-end digital experience to customers. Its key service offerings include digital business, product engineering services, infrastructure management services and security.

At the price band of Rs 165-166, the HMT issue was priced at a price-to-earnings (P/E) of 16.5x-17.3x FY22E EPS, assuming a 15-20 per cent profit before tax (PBT) growth in FY22 and factoring in 25 per cent tax rate for the year, as mentioned by the management.

Analyst at KRChoksey Shares and Securities believe there is a high probability of HMT achieving this growth, which is likely to be led by revenue growth aided by continuing robust traction in digital services, rising investments by clients in these services to transform their businesses, differentiated business model and vertical focus, along with growth recovery from 2QFY21 after flat YoY revenue in 1QFY21.

Nirmal Bang Securities note that the company is widely present across various industry which lowers the dependence of the company on one segment. About 76 per cent of the company’s presence is in verticals which has lesser impact due to Covid. About 24 per cent of the revenue comes from travel, retail and manufacturing which are the most impacted vertical on industry front due to Covid. "Other than this, Edutech and BFSi vertical, which contributes higher revenue to the company are expected to grow faster for industry during FY18-FY2025," the brokerage had said in the IPO note. 

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