Fundamental analysis of the share of Happiest Minds

 

 A stock that gave multi-bagger returns on listing and also posted on which we'll conduct fundamental analysis of the stock: Happiest Mind Technologies Ltd. Happiest Minds was incorporated in 2011 by Mr. Ashok Soota, he spent his early career days with Shriram Group of Companies in 1965. He was the chairman of Wipro from 1984 to 1999. Under Mr. Ashok Soota, Wipro's IT revenue grew from $2 million in 1984 to $500 million in 1999. He founded the Mindtree company, which today has quite a billion dollars in revenue with over 20,000 employees.

So from Shriram Group to Wipro so putting in place your own company, launching your IPO, and giving great returns to your investors. They need over 150 active clients with 3 key business verticals: Digital Business, Product Engineering, and Infrastructure and Security Management.

Let us now study the revenue breakup from the business vertical. As of Q3 FY21, 24.8% of revenue comes from digital business, the foremost contributor being product engineering which accounts for about 50% of total revenue and 21.5% from infrastructure and management security services. If we add all the BU'S Earth business units together, the revenue comes from the digital space, and also the company makes 96% of its total revenue from the digital sector. it absolutely was about the corporate, now let's observe the geographies that are important within the IT industry

Let us now see the country-wise revenue breakup of Happiest Mind with 72.2% of its revenue coming from the US, followed by India at 13.4%, Europe at 10.6%, and the remainder of the planet at 3.8%. Allow us to now attempt to understand their focus and appearance at the revenue breakdown of assorted IT sectors. The corporate generates 24.9% of revenue from Edutech, followed by Hitech at 20.2% Telecom, Media and Entertainment at 14.4%, BFSI at 17.4%, Industrial at 7%, and Manufacturing at 6.9%. Concentration risk is reduced for companies that have a wider customer base

Let us now see their dependence on their top customers at 14.8% from the highest 1 customers, 34.4% from the highest 5 customers, almost half the highest 10 customers and 66.5% from the highest 20 customers, so we will understand that they're still We are focused on some customers and time will tell. We also must know the typical revenue from each customer and whether it's increasing or decreasing.

You will get to grasp this relationship and which projects are turning out. And if the revenue is growing or not, their average revenue per customer is increasing as on the dimensions of USD 1000, it had been 471 in FY18, FY19 502 in FY21 which has become 683 in FY21

Attrition is very important in IT companies, which implies what number of people are leaving and the way much it costs to rent and train new ones. So his rate is 13.1%, which he has reduced and may be a positive point for him.

Let us now understand about the industry, because when the industry grows the businesses also grow.

Let's see the digital business and the way it's visiting perform. Here is that the spend on digital earth, the more companies spend on their digital business, the more it'll expand, expected 20.2% CAGR from 2018 to 2025. So If it really is, as this company grows, this company could also see huge growth opportunities. The merchandise engineering sector may also have a CAGR of 11%, which might boost the company's growth. The infrastructure MI is additionally expected to deliver 10% CAGR. Hence, there is good growth potential altogether areas of Happiest Mind.

Let us now understand the financial position of the corporate and see if it's overvalued or undervalued. We’ve got taken Tata Elxi, CoForge, L&T, Oracle, Mphasis. Happiest Minds contains a market cap of 11665 crores, with the very best PE on the list, Mphasis at 26, Oracle at 18, L&T at 40, Tata Elxi at 59. In terms of ROE also, they need to outperform the complete industry by 83%, Tata Elxi 30%. In terms of OPM, it's very healthy at 21% while Tata Elxi is at 28%. Its NPM is 11.85%, over half that of Tata Elxi at 20.16% while compared to Oracle at 35.35, much lower. The value of their IPO was Rs 166 and since the day it's given a return of 350% listed

Let us now understand the benefits and drawbacks of the corporate

The first major strength is that the corporate includes a high specialization in the digital space which provides it 96.6% of revenue. And it's the segment where the corporate is functioning on AI and Robotics which might see growth.

The second is that the client network, because the company currently has 150 active clients. But it also has the disadvantage that it's some specific clients.

Another strength is that the low rate of attrition and increased average revenue per customer which supplies us a powerful relationship with our customers and which the corporate can improve

Now the primary weakness is that the concentration on the shoppers. It’s about 50% of its revenue is from top customers, so if there is a backlash, the company's revenue will take a giant hit.

Next is succession risk, as of now Mr. Ashok Soota who is running the corporate at the age of 74. And it'll be important for you to work out how the corporate succeeds.

Now let's discuss its Q4 results,

We have taken total income and profit and compared March 20 and March 21 quarters. Their total income has increased from 186 crores on 20 March to 220 crores as of 21 March with an 18% year-on-year jump. A significant increase in profits, it's seen a growth of 580% on March 21 from 5.3 crores on March 20 to 36 crores. And if compared to December 20th quarter, its profit decreased by 14.47% from 42 to 36 crores, while the full income 192 crore has seen a rise of 14.45%. DC 20 within the quarter.

And if we glance at the performance of the complete year, the corporate earned a revenue of 773 crores from last year. Which was a yearly jump of 10.77% to 698 crores, and net income increased by 126% from last year's 71 crores. With this, a rise of 162 crores was seen. This subscriber count stands at 173 customers as of 31 March 2021, additionally to 23 new customers. The 12-month trailing number is down from 13% to 12.4%

(Warning: Please invest supported your research. the aim of this text is to share information only)