Shares of Happiest Minds Technologies will be in focus after it said in a notice to exchanges that it will acquire 100 percent stake in PureSoftware Technologies for Rs 635 crore.
"We wish to inform you that the company has executed a share purchase agreement to acquire 100 percent of the equity interest in the share capital of PureSoftware Technologies Private Limited, subject to the terms and conditions set out in the agreement," Happiest Minds said in a notice to exchanges.
The firm announced upfront payment of Rs 635 crore at closing, with a potential additional Rs 144 crore upon meeting FY25 performance targets. The acquisition is expected to close by May 31.
PureSoftware is engaged in the business of providing digital engineering and transformation services and software solutions to its customers. The company reported revenue of Rs 351 crore in FY24 from Rs 287 crore a year ago.
This acquisition will firm up Happiest Minds domain capabilities in banking, financial services, insurance (BFSI) and healthcare and life sciences verticals, while also giving access to a set of marquee customers, it said.
Happiest Minds shifts to industry-focused structure, moving from horizontal to vertical approach. Six industry groups were established by the firm: industrial, manufacturing and E&U, healthcare and life sciences, retail, CPG and logistics, BFSI, hi-tech and media and entertainment, and ed-tech.
Analysts predict the structural change could boost growth by 2-3 precent in the medium term. Despite recent growth slowdown, the business scale, quality, and potential recovery in discretionary services are expected to maintain higher valuation compared to peers.
"We expect HAPPSTMN to post 10/15/22 percent US dollar revenue growth over FY24/25/26, which implies $100 million incremental revenue run-rate over FY23-26 as compared to $85 million incremental over FY20-23 (24 percent CAGR over FY20-23). Factored EBITM at 17.1/18.1/18.9 percent over the same period, translating to an EPS CAGR of 26 percent over FY24-26. Faster recovery in discretionary spending in the sector and value accretive acquisition ahead can be positive triggers for the stock, which is currently trading at 43x and 34x FY25E and FY26E (vs. the historical average of 55x)," HDFC Securities said in its latest note.
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