KR Choksey's research report on Happiest Minds Technologies
Dollar Revenue was up 5.5% QoQ to USD 39.9Mn. Rupee revenue grew by 5.9% QoQ to INR 3,006Mn. Reported operating margin remained flattish at 20.9% QoQ due to higher SG&A expenses to 18.6%, up ~120bps which was partially offset by lower employee expenses. Reported Net profit grew by 6.6% QoQ to INR 521Mn with margin of 17.3% due to lower other income. 96.8% of the total revenue comes from Digital business and Agile contributes +93% of the total revenue. The ongoing talent crunch will keep margins under check in the near term, offset by higher offshoring, utilization and operating leverage. Growth was broad based across the US (Contri.|65.7%) and India (Contri.|16.2%) and mainly driven by Edu-Tech (Contri.|23.6%), Travel, Media & Entertainment (Contri.|13.7%) and Manufacturing (Contri.|10.1%).
Outlook
We reduce our target price to INR 1,300 (Previous Target price of INR 1,510) based on a P/E multiple of 70.7x to the FY24 estimated EPS of INR 18.4 and hence we maintain our target price with “BUY” rating.
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