YES Securities' research report on Happiest Minds
Happiest Minds (HAPPSTMN) reported slight miss on financial performance for the quarter. Both, the sequential revenue growth and EBIT margin were below estimates. It reported constant currency growth of 3.6% QoQ (up 3.4% QoQ in USD terms, up 4.0% QoQ in INR terms), led by Edutech vertical (up 7.9% QoQ). There was sequential decline in EBIT margin(down 247 bps QoQ) led by impact of wage hike in the quarter. Employee attrition continues to decline as LTM attrition decreased by 220 bps QoQ to 14.4%. Digital accounts for 95.3% of revenue as of Q2FY24 vs 95.1% as of Q1FY24. The near term demand environment remains challenging as the clients especially in select sectors remain cautious regarding the evolving macroeconomic situation and it has led to near term moderation in revenue growth. The deal pipeline remains strong and it supports revenue growth visibility. Management has guided for organic revenue growth of 12% in cc terms for FY24 with EBITDA margin band of 22-24%. Falling employee attrition is expected to support operating margin going ahead. We estimate revenue CAGR of 19.6% over FY23‐25E with average EBIT margin of 20.5%.
Outlook
We maintain our BUY rating on the stock with revised target price of Rs 1,100/share based on DCF methodology. The stock trades at PER of 45.6x/33.9x on FY24E/FY25E EPS.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
