Bengaluru-based digital IT services provider Happiest Minds Technologies is trading at more than 60 percent premium over issue price in the grey market ahead of its initial public offering.
Veteran Ashok Soota-owned firm will open its Rs 702-crore IPO for three-day bidding on September 7.
The grey market premium is currently at around Rs 105-110 per share, i.e. 63-66 percent higher compared to issue price of Rs 165-166 per share, experts told Moneycontrol.
The public issue comprises a fresh issue of Rs 110 crore and an offer for sale of 3,56,63,585 equity shares by promoter and founder Ashok Soota and investment firm JP Morgan-backed private equity fund CMDB II.
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"We believe Happiest Minds IPO offer gives investor a unique opportunity to own a digital product engineering company. We see digital engineering business is growing much faster than traditional IT business and it is well positioned to overcome the business challenges due to the COVID-19 pandemic with high exposure into 'edutech' and 'high tech' verticals which have grown faster during the pandemic and enabling the company to grow at around 20 percent YoY whereas the industry has slowed down to around 8-10 percent," said Prashanth Tapse, AVP Research at Mehta Group who advised investors to subscribe to this offer.
Considering its customer-centric approach, End to End digital lifecycle, Agile Engineering and Strong brand backed by industry veteran, he is optimistic on Happiest Minds for medium to long term play.
Happiest Minds is an IT servicing company which applies agile methodologies and focuses on delivering seamless customer experience, business efficiency and actionable insights. Its business is divided into three categories namely Digital Business Service (DBS), Product Engineering Service (PES) and Infrastructure and Management Security Service (IMSS).
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These services are delivered across industry sectors such as retail, edutech, industrial, BFSI, hi-tech, engineering R&D, manufacturing, travel, media and entertainment, and others.
Company received 96.9 percent of its revenues from digital services segment, which is one of the highest among Indian IT companies, in FY20.
In FY18-20, its revenue growth stood at 23 percent on a CAGR basis while profit witnessed a steady growth from Rs 14 crore in FY19 to Rs 72 crore in FY20 due to increase in sales, lower operating expenses and 50 percent reduction in interest cost in FY20.
As of June 30, 2020, Happiest Minds had 148 active customers and has a global presence in countries like US, UK, Australia, Canada and the Middle East.
Company is going to use proceeds from fresh issue towards long term working capital requirement and general corporate purposes.