Accumulate Happiest Minds Technologies; target of Rs 579: Deven Choksey

Deven Choksey's research report on Happiest Minds Technologies

Revenue grew by 10.0 % YoY (+4.3 % QoQ) to INR 5,736 Mn, primarily driven by robust outperformance in the Generative AI Business Unit (GBS), which recorded 15.3 % sequential growth, along with incremental traction in the Retail/CPG segment that rose ~10 % QoQ. These gains were partially offset by a slight decline in BFSI and continued softness in Edutech, which is expected to bottom out by Q3. In constant currency (CC) terms, revenue grew 6.7 % YoY (+2.3 % QoQ). In USD terms, operating revenue stood at USD 65.1 Mn, up 4.4 % YoY (+1.2 % QoQ).

Outlook

Revenue conversion is expected to remain muted in the near term amid an industry-wide slowdown and tight discretionary budgets, leading to extended decision cycles and deal ramp-up delays in select IMSS and BFSI engagements. However, growth visibility remains strong across key verticals—BFSI is poised for recovery in H2, healthcare and life sciences continue to build momentum, and the Generative AI Business Unit (GBS) sustains its role as a core growth driver. Sequential improvement in U.S. revenues and record-high utilization of 80.7% underline operational resilience. We have rolled forward our valuation to Sept’27 estimates. We value Happiest Minds at 27.0x Sept’27 EPS, implying a target price of INR 579. We reiterate our “ACCUMULATE” rating on the stock.