Initial Public Offering(IPO), Talking about the last few IPOs, and if you had applied there and allotted the shares, you would have made an outstanding return. As of today, many interested are looking forward to investing in IPOs. Now I have got another article for all of you. I will be discussing Happiest Minds Business Model & How investors of Happiest Minds IPO achieved 111% listing gain in September 2020 from September 2020 to July 2021 company has 276% growth in just less than a year. You can check out Heranba Industries Ltd Business Model if you are thinking of investing in some good stock.
Founder of Happiest Mind Technologies Ltd
Happiest Minds was incorporated in 2011 by Mr. Ashok Soota. Mr. Ashok Soota spent his early career days with the Shriram Group of Companies in 1965 & He was then the President at Wipro from 1984 to 1999. Under Ashok Sootas leadership, Wipros IT revenue rose from $2 million in 1984 to $500 million in 1999.
He founded Mindtree, whose revenue in todays time is more than a billion dollars with more than 20,000 employees. So starting from the Shriram Group to Wipro and then founding his own company, launching its IPO, and giving great returns to its investors.
Understanding Happiest Minds Business Model
Friends, Talking about the business of the Happiest Mind, its divided into three verticals. Those three verticals are Product Engineering Services, Infrastructure Management Services and Digital business services.
If I try to explain their business more simply, then say if I have an offline company with many clients, but I want to expand further to the online cause I want an App, Website, etc., to improve my reach products. If I want to market my products online via these platforms, then Happiest Minds helps create them.
It provided end to end business services to move from offline to online. Thus three verticals make a company go from offline to online. If you want to move from offline to online, you might need many vendors cause of this; the Happiest Minds have formed these alliances with the vendors beforehand. The names of these vendors are Amazon Web Services, Microsoft and Salesforce. These are the vendors who help a business to move online and function well.
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Revenue & Profit of Happiest Minds as on Sept 2020.
As you understood the verticals, you would want to know the breakup of divisions as per their total earnings. For example, approx 50% of Happiest Minds revenue comes from Digital Businesses, 22% of revenue comes from Infrastructure Management Services & The rest of the 23% comes from Product Engineering vertical.
If we talk about its revenue geography wise that its revenue is the highest, then its United States has more than 75% of its revenue coming from the US.
Lets talk about this Company in financial terms by talking about its Revenue & Profit. Happiest Mind reported a Net Profit of Rs 50 Cr in June Qtr. Its sales were around 177 Cr. Out of 177 Cr revenue, it earned a Net Profit of Rs 50 Cr in June Qtr, 2020.
With this information, you cant figure out how a company would have performed in last few years. Thus lets talk about this Companys Net Revenue and Profit in the last 2,3 years to understand its financial situation better. The shocking fact is when we speak about this Companys financial year, 2018, it was a loss-making company. In FY 2018, This Company had reported a loss of Rs - 22 Cr. If we talk about FY 2019, then this Company had booked a profit of 14 Cr. In the following year, its profit jumped from 14 Cr to almost Rs 77 Cr. which means the Company have performed well in the last two years. We can see a good result in the recent June Qtr 2020 as well. If we talk about the compounded growth in terms of its revenue, it has been more than 22% in the last few years as on September 2020.
In FY 2018, its revenue was at around Rs 462 Cr, which jumped to Rs 590 Cr in FY 2019. In FY 2020, it came up to Rs 698 Cr, which shows you how well its compounded growth has been in the last few years.
Happiest Minds IPO
Lets talk in detail about the Happiest Minds IPO. Its price band was from Rs 165 to Rs 166. The minimum no. of lot size that you could apply for was 90. Talking about the maximum no. of lots, its at 13, which means you could not apply for a lot size above 13. In the retail category, The IPO date was to apply for this IPO was from 7th Sept 2020 to 9th Sept 2020. The Listing date was 17th Sept 2020. If we dive into more details, then this IP0s Size was Rs 110 Cr. Another interesting fact here is this company will offer for sale after IPO; Its size is around Rs 702 Cr.
So you would want to know the difference between IPO & Offer for sale. IPO stands for Initial Public Offering, and the Company brings in new shares to the market. The money which they receive here goes directly to the Company, not to any of its promoters.
Here if we talk about an Offer for sale of more than Rs 700 Cr, It is done so that any promotor can sell his shares off and cash out. Now say its founder offers its shares at Offer For Sale, other than that any big company which wants to exit by selling its shares can take up this offer for claim and exit from the Company. These were some basic information about the Happiest Mind.
Shares of Happiest Minds Technologies listed at a premium of 111% on the BSE on 17 September 2020 at ₹351 compared to its issue price of Rs.166. The combined trading volumes on both exchanges surpassed the total issue size of 42.2 m equity shares. The stock finally closed at ₹371 at the end of the day.
Happiest Minds As A Multibagger Stock
A stock that has given the multi-bagger return on listing & post listing will perform a fundamental analysis of Happiest Mind Technologies Ltd stock.
Revenue & Profit of Happiest Minds as on Q3 of FY 2021
Let us now see the revenue breakup from the business verticals. According to the Q3 FY21, 24.8% of revenue comes from the digital business. The major contributor is Product engg with almost 50% of the total revenue And 21.5% from Infrastructure and managed security services.
Let us now see the country-wise revenue breakup of Happiest Mind. 72.2% revenue comes from America, followed by 13.4% from India, 10.6% from Europe, and 3.8% from the rest of the world.
We also need to know the average revenue from every customer and whether it is increasing or decreasing. You will get to know the existing relationships and what projects are upcoming, and if revenues are growing or not. Their average revenue per customer is continuously increasing. As USD 1000 scale, it was 471 in FY18, 502 in FY19, which has come to 683 in FY21.
Understand Attrition of Happiest Minds Technologies Limited
Attrition is a gradual voluntary reduction of employees (through resignation and retirement) who are not then replaced. Attrition is essential in IT companies, meaning how many people are leaving and how much cost is incurred in hiring and training new employees. So their attrition rate is 13.1%, which they have reduced and is a positive point for them.
Understand About The Industry Happiest Minds Operates
Let us now understand about the industry, because when the industry grows, the companies grow too. First, let us see the digital business and how it will perform; here is the spending on digital, meaning the more the companies spend on their digital business, the more it will expand.
A 20.2% CAGR is expected from 2018 to 2025; hence, this company can also see substantial growth opportunities if it grows. There can be an 11% CAGR in the product engg sector, which can increase the companys growth. The infrastructure security service is also expected to give a 10% CAGR. Hence, there are good growth prospects in all the segments of Happiest Mind Technologies Ltd.
Points To Be Noted Before Investing In Happiest Minds Stock
- For investors, the thing to notice is its 48% of the revenue comes from its top 10 clients, which shows its high concentration of income among its top 10 clients. It gets an overall 12% revenue from its most significant client, cause of which this companys dependency increases heavily on its top customers.
- The significant strength is that the company has a majority focus on the digital space, which gives it 96.6% of revenue, and this is the segment where the company is working on AI and robotics, which can see growth.
- Another strength is the low attrition rate and the increase in avg revenue per customer, which tells us the robust relationship with its customers.
Conclusions on Happiest Minds Technologies Business Model
I hope you would have liked this article! In the end, I would like to give a disclaimer that all our videos are purely for educational purposes. We only publish educational content with no recommendation to buy or sell.
If you are planning on making a profit from your investments in the short term and getting out of it, it can be a wrong strategy. Instead, always have a long term perspective in mind. If you invest for the long time in mind, your chances of profit might increase.
So, if you are planning to invest in the long term, then Happiest Minds can be a good investment for you. As I already shared in my articles that how long you are investing is much more important than how much you are investing to make your wealth.
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