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Happiest Minds IPO Review and Stock Analysis in Detail



Positioned as “Born Digital. Born Agile”, Happiest Minds focuses on delivering a seamless digital experience to their customers. Their business is divided into the following three Business Units (BUs)) including digital business, product engineering, infrastructure management and security services. Their capabilities provide an end-to-end solution in the digital space. They believe that they have developed a customer-centric focus that aims to fulfil their immediate business requirements. They help their customers in finding new ways to interact with their users and clients enabling them to become more engaging, responsive and efficient. As of March 31, 2020, they have 157 active customers. 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.

The Frost & Sullivan Report estimated that 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. In Fiscal 2020, 96.9% of their revenues came from digital services. This is one of the highest among Indian IT companies (Source: Frost & Sullivan Report). This report also noted 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.


Acquire new accounts and deepen key account relationships

They devote significant attention to understand the behaviour, preferences and trends of their customers through research and a consultation process. They conduct periodic market scans to identify upcoming technologies.

Further investments in Their CoEs and digital processes
They intend to continue investing in their employees and increase their R&D capabilities. Their entry into new areas such as payments and intelligent enterprises and developing products that address industry-specific customer requirements. They have identified AI, blockchain, RPA, robotics & drones as focus technology areas.

Strengthen existing partnerships and enter into new partnerships with Independent Software Vendors
They have a long-standing relationship with global ISVs and technology companies. Their current partners include Microsoft, Amazon Web Services, NetSuite, and Salesforce (Source: Frost & Sullivan Report). Their culture of software engineering excellence enables them to expand their services into other key industry verticals.

Domain led approach towards customer acquisition and revenue generation in specific verticals
To further enhance and develop their solutions and offerings, they have focussed on certain verticals including banking and financial services, Edutech, Retail, Manufacturing, Travel and Hospitality and Enterprise.

Attract, develop and retain skilled employees to sustain Their service quality and customer experience
They conduct lateral hiring through a dedicated IT professional talent acquisition team whose objective is to locate and attract qualified and experienced IT professionals within the relevant region.

Selectively Pursue Strategic Acquisitions
They plan to selectively pursue acquisitions. In 2017, they acquired OSSCube LLC and Cupola Technology Private Ltd. to expand their DBS and PES BUs, respectively. These acquisitions have given them experience in completing and integrating complementary acquisitions.


Strong brand in Digital IT services:
Happiest Minds brand, “Born Digital. Born Agile” is a reflection of digitalization being built into the essence of their business. In FY2019 and 2020, 97.2% and 96.9% of their revenue from operations were from providing digital IT services.

Growing high revenue-generating customer accounts with a high proportion of repeat revenues and revenues from the mature market:
They have generally witnessed an increase in the number of their top accounts by revenue contribution.

Scalable business model with multiple drivers of steady growth:
They believe that their business model is scalable across customer industries, functions and geographies. Also, their spread across customer industries and geographic markets, have also developed key operational drivers delivering them with steady growth.

End to End capabilities spanning the digital lifecycle from roadmap to deployment and maintenance
Their core competency is full lifecycle software development services including design and prototyping, product development and testing, component design and integration, product deployment, performance tuning, etc.

Mindful approach towards systems, employee policies and practices led by experienced leadership and a senior management team focused on sound corporate governance practices


ISSUE TYPE Book Built Issue

42,290,091 Eq Shares of Rs.2 (Aggregating up to Rs 702.02 Crore)

OFFER FOR SALE Aggregating up to Rs 592 Crore
ISSUE PRICE Rs 165 to Rs 166 Per Equity Share
FACE VALUE Rs 2 Per Equity Share
MARKET LOT 90 Shares


The Offer comprises the Offer for Sale and the Fresh Issue.
Offer for Sale
The Company will not receive any proceeds from the Offer for Sale.

Fresh Issue
The Company proposes to utilise the Net Proceeds from the Fresh Issue towards funding the following objects:
1. To meet long term working capital requirement; and 

2. General corporate purposes (collectively, referred to herein as the “Objects”).


Set forth below is the equity shareholding of the Promoter and Promoter Group in the Company as on the date of this Red Herring Prospectus, on a fully diluted basis:

Name of Shareholder Number of Equity Shares held Percentage of pre-Offer Equity Share capital (%)
Ashok Soota 68,475,924 48.83
Promoter Group    
Deepak Soota 49,063 0.03
Kunku Soota 42,380 0.03
Suresh Soota 31,459 0.02
Usha Samuel 78,566 0.06
Ashok Soota Medical
Research LLP
17,948,784 12.80
Total 86,626,176 61.77


Global Technology Market Spend

The global technology spend is estimated to be USD4,218.7 billion in 2019. A growth of 6.3 per cent is expected year-on-year, reaching USD 6,080 billion by 2025. Software and engineering research and design (ER&D) are expected to lead the growth going forward.

Total Global IT Market Spend, 2018-2025 (USD Billions)

Digital IT and legacy IT

Legacy IT

Legacy systems are defined as software or hardware related IT stack that comprises of internal systems, external communication channels and storage. Investments in legacy systems are relatively higher.

Digital IT 

Digital services, enable organisations to leverage the new-age services that have permeated the technology market. With technology convergence, the term digital encompasses services that are interconnected within the network of technological components via the internet.

Digital vs. legacy market size, 2018 – 2025, (USD Billion)

In 2019, the global enterprise digital spend stood at USD691 billion and represented about 16.3% of the total technology spend within the IT sector. By 2025, the enterprise digital spend is projected to be around 34% of the total technology spend with digital spending growing at a healthy CAGR of 20.19%. With organisations looking to capitalise on the benefits of digitisation through leveraging capabilities around cost-reduction, service automation and efficient work channels, the adoption of digital technologies will improve. 

Global IT Spend across Emerging Technologies: Split, 2018-2025, (USD Billion)

The global IT spend across key emerging technologies is expected to grow from USD 1,160 billion in 2019 to USD 3,558 billion in 2025 growing at a CAGR of 20.5%

IT Services Split Across Key Functions 

IT Services Split, 2018-2025, (USD Billion)

The IT spend across key technology functions mentioned above is expected to grow from USD1,061 billion in 2019 to USD 1,342 billion in 2025 growing at a CAGR of 4%. This segment is expected to grow at a CAGR of 12.4% from 2019 to 2025. Custom application development is also expected to see a healthy CAGR of 8.9% due to the increasing demand within the enterprise application development sector as well as from the mobile application development.

Global Technology Spend Across Regions

Regional Split (USD Billion)

Global Technology Spend Across Select Industry Verticals

Vertical Split, 2018-25, (USD Billion)


  1. Manufacturing includes discreet & process manufacturing along with natural resource processing industries
  2. Retail includes both physical retail (brick & mortar stores) as well as online retail
  3. The chart above only represents spending across select key industry verticals.


Key Indian technology market trends 

India Technology Market Spend

The IT-BPM sector in India stood at USD 177 billion in 2019 and is expected to witness a growth of 6.2 per cent year-on-year to reach USD 252 billion by 2025 

Total India IT-BPM market expenditure, FY2018-2025 (USD Billions)

The Indian IT-BPM industry has the highest relative share (7.9%) in the national GDP as of 2019. The growing startup ecosystem and the increasing number of academic graduates opting to work in the sector have been a major growth driver for the IT-BPM sector in India. 

IT Services Split Across Digital/Legacy

Digital services are expected to gain significant traction going forward and witness a growth of 12.2 per cent year-on-year to reach USD 52 billion by 2025. Legacy services at the same time are expected to grow at a CAGR of 3.1% only.

Digital and legacy split (USD Billion), FY2018-2025

IT Services Split: Split of Domestic & Exports

Exports from the industry increased to USD 74 billion in FY19 while domestic revenues (from IT services) advanced to USD 16 billion.

IT Services Split of Exports (USD Billion), FY2018-2025

IT Services Split of Domestic (USD Billion), FY2018-2025

India IT Services: Split of Exports

India is the topmost offshoring destination for IT companies across the world. Having proven its capabilities in delivering both on-shore and off-shore services to global clients, emerging technologies now offer an entire new gamut of opportunities for top IT firms in India.

IT Services Split of Exports by Industry Verticals (USD Billion), FY2018-2025

IT Services Split of Exports by Regions (USD Billion), FY2018-2025

The Indian IT exports market is driven by the US market that contributes to over 60% of the overall market revenue. The BFSI sector occupies a major share of overall IT exports owing to the need for solutions focusing on security and enhanced customer experience. The increasing demand for connectivity and digitisation in otherwise traditional sectors are also expected to increase the demand for IT services and consequentially drive the growth of IT exports.

Indian IT: Market Split by Key Businesses

Digital business services

Digital business services are those that are able to create business value through the adoption of powerful digital and disruptive enablers such as mobile, analytics, social media, big data and cloud to fuel topline growth, improve customer experiences, and foster a culture of innovation.

Enterprise digital spend, 2018-25 (USD Billion)

Product engineering services

Product engineering services (PES) includes the engineering of next-generation products and platforms across software and hardware that power digital evolution and provide end-to-end engineering services for developing high quality, scalable and secure products.

PES split by regions, 2018-25, (USD Billion)

PES split by segments

The global PES market is expected to have a steady CAGR of 11.3% between 2019 and 2025. The offshore delivery of software products is on the rise and with the increase in the number of service providers that cater to delivering the requirements on this front; the market growth is generally expected to be healthy.

Infrastructure Management & Security Services (IMSS)

IMSS split by solution, 2018-25, (USD Billions)

Competitive Landscape

Top Digital Service Providers globally

Global organisations like Globant, EPAM and Endava have 100% of their revenues derived from digital services. Amongst the Indian IT firms, Happiest Minds' digital IT revenues as a proportion of overall revenues are the highest at 97% as of March 31, 2020. Other leading Indian IT firms like Infosys, Wipro, TCS and Tech Mahindra, are also diversifying their offerings and showcasing ideas in digital services like blockchain, AI using innovation hubs, R&D centres, in order to create differentiated offerings.

Digital as a percentage of total revenue


Values in Rs. Crore

Fiscal/Financial Periods Total Income Total Expenses PAT Total Assets Non Current Liabilities (Borrowings) Current Liabilities (Borrowings)
31 March 2018 489.12 512.20 (22.47) 386.99 14.83 68.55
31 March 2019 601.81 576.25 14.21 413.52 8.5 60.12
31 March 2020 714.23 629.36 71.71 508.15 1.32 69.16
30 June 2020 186.99 146.15 50.18 573.08 - 90.89

Total Income

Total Expenses

Profit After Tax 

Non Current Liabilities (Borrowings)

Current Liabilities (Borrowings)


1. Basic EPS and RoNW

Fiscal/Financial Periods Basic EPS (In Rs.) RoNW(%)
31 March 2018 (3.13) (20.6)
31 March 2019 1.89 (21.1)
31 March 2020 7.04 27.1

Basic EPS (In Rs.)


2. Price/Earning("P/E") ratio in relation to Price Band of Rs. 165 to Rs.166 per equity share

Particulars P/E at the lower end of price band (no. of times) P/E at the higher end of price band (no. of times)
Based on basic EPS for the year ended March 31, 2020 on a consolidated basis 23.4 23.6
Based on diluted EPS for the year ended March 31, 2020 on a consolidated basis 30.8 31.0

Industry Peer Group P/E ratio

Particulars Industry P/E (number of times)
Highest 30.3x
Lowest  24.3x
Average 26.9x
All the financial information for listed industry peers mentioned above is sourced from the audited financial statements of the relavent companies for Fiscal 2020, as available on stock exchanges.


Name of the Company



Face Value Per Share Rs. Basic EPS (Rs. per share) NAV (Rs. per share) P/E (Basic) RoNW (%)
Happiest Minds Consolidated 2 7.04 26.0 31.0# 27.10
TCS Consolidated 1 96.19 225.9 26.1x 37.2
Infosys Consolidated 5 38.97 154.8 24.3x 25.4
LTI Consolidated 1 87.45 310.4 27.1x 29.5
Mindtree Consolidated 10 38.35 191.8 30.3x 19.5

Note: # Data is based on the diluted EPS at the upper end of the price band
1. Financials for TCS, Infosys, LTI, Mindtree are for the year ending March 31, 2020. 

2. Basic EPS for companies are for the year ending March 31, 2020. 

3. Net worth for the companies have been computed as sum of share capital, minority intrest and reserves as of March 31,2020

4. P/E Ratio has been computed as the closing market prices of the companies on BSE website as of August 21, 2020.

Basic EPS (Rs. per share)

P/E (Basic)

NAV (Rs. per share)

RoNW (%)


1. RHP (Happiest Minds)


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