We will continue to focus on IP-led revenue growth as margins are higher there: Happiest Minds

Venkatesha Babu Bengaluru | Updated on October 28, 2021

IT solutions company posted 24 per cent q-o-q growth in net profit

Happiest Minds Technologies (HMT), a Bengaluru-headquartered company which bills itself as a ‘digital transformation and IT solutions company’ has reported that its revenue has grown by 8 per cent to ₹274.12 crore and net profit has increased by 24.4 per cent to ₹44.44 crore compared to the first quarter of the current fiscal.

However the company also faced a few headwinds as employee utilisation rates have marginally dipped to 79.7 per cent this quarter compared to 82.1 per cent in the last quarter, and attrition rate has gone up to 18.5 per cent on a trailing twelve months basis.

Low utilisation rates

Joseph Anantharaju, Executive Vice Chairman, HMT, toldBusinessLine, “Earlier, at 82–83 per cent, our utilisation led to an almost-just-in-time kind of supply line. So in order to provide some cushion, we had a slightly lower utilisation.”

“As far as attrition is concerned, it has been an industry-wide phenomenon. Inspite of that, we have had a net addition of 258 employees this quarter and 568 employees in the first six months. We are taking more steps to mitigate attrition,” he added.

Drop in y-o-y profit

Queried on the drop in net profit for the first six months of the current fiscal at ₹80.17 crore compared to ₹84.26 crore for the same period last year, Venkatraman Narayanan, MD and CFO of HMT, said that there were only two reasons for it. “One was an exceptional item related to our buying a company in the previous quarter as well as an increase inthat the average tax rate had increased. A real comparison of profitability removing the exceptional item should be at an EBITA and a PBT level.”

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HMT, which has been highlighting traction on the IP led revenue growth, said that it would make continued investments in the space as that was more profitable.

“Today about 10 per cent of our revenue is IP led. How long will we keep adding people, add billing hours and keep growing revenue and profitability? Customers want to see value. And that is where IP led business makes sense. We will continue to grow that share of the pie,” Narayanan added.

Published on October 28, 2021

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