The Rs 702-crore initial public offering of Happiest Minds Technologies has received stellar response from all investors. The issue has subscribed 150.98 times so far on September 9, the last day of bidding.
The public issue has got bids for over 351 crore equity shares against offer size of over 2.3 crore equity shares, the data available on exchanges showed.
The portion set aside for retail investors has subscribed 70.94 times, while the reserved portion of non-institutional investors witnessed 351.4 times subscription and that of qualified institutional buyers 77.42 times.
The IPO comprises a fresh issue of Rs 110 crore and an offer for sale of 3,56,63,585 equity shares by promoter Ashok Soota and JP Morgan-backed private equity fund CMDB II.
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The price band of the issue has been fixed at Rs 165-166 per share and the maximum bids have been received, so far, at higher end of price band. Even anchor investors invested at Rs 166 per share.
"At upper price band, it is offered at 23.6x FY2020 EPS, demanding market cap of Rs 2,438 crore, which is at a slight premium to few of the smaller sized IT companies. Considering the very high exposure to digital services and strong promoter background, we expect that the company will continue to grow at a faster pace as compared to similar sized companies and therefore should command a premium valuation to peer group. We would therefore recommend investors to subscribe to the IPO," Angel Broking said.
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Happiest Minds is a small sized IT services company promoted by Ashok Soota who was one of the founding members of Mindtree.
The company is uniquely positioned as derived 96.6 percent of its revenues in FY20 from digital services that are expected to be the fastest growing segment in the IT sector, said Angel Broking.
The company has been positioned as 'Born Digital. Born Agile' and focuses on delivering a seamless digital experience to its customers. The company's offerings include digital business, product engineering, infrastructure management and security services among others.
Motilal Oswal also likes the company given its (1) strong presence in digital services, (2) scalable business model with end-to-end capabilities and (3) fast improving financial performance. Hence, investors can subscribe to the IPO, the brokerage advised.
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Further considering market conditions and bright prospects for IT companies post COVID-era, one may also get listing gains, it feels.
Revenue from operations increased at a CAGR of 22.8 percent during FY18-FY20 to Rs 698.2 crore. After posting a net loss of Rs 22.5 crore in FY18, the company's profit stood at Rs 14.2 crore in FY19 and Rs 71.7 crore in FY20. In quarter ended June 2020, Happiest Minds reported a net profit of Rs 50.2 crore on a revenue of Rs 177 crore.