Following a successful IPO, IT consulting and services’ company Happiest Minds is planning to acquire companies in the digital space with a ticket-size of around $25 million.
The company’s MD and CFO Venkataraman Narayanan told BusinessLine that the company has around ₹460 crore as cash balance “We have to manage acquisitions and working capital needs out of the cash we have right now,” he said. Narayanan said the acquisitions could be companies with certain capabilities or those with specific domain expertise.
He pointed out that Happiest Minds has been growing at around 20 per cent during the last three years, similar to digital services companies who have achieved it through a mix of organic and inorganic strategies. “The 20 per cent growth is all organic in our case. We would want to give it a boost with inorganic growth as well,” he said.
Growth in business
Narayanan said that the 5.4 per cent growth quarter-on-quarter shows growth is returning, with the company registering 25.6 per cent in EBITDA, beating projections. He also said that on a sequential basis, the net profit had dropped 30 per cent to ₹34.08 crore because of an accounting provision. However, utilisation has gone from 74.9 per cent to 78 per cent. “The management capability or the bandwidth of this company is quite good and is capable of running a larger company and we should effectively put that to good to use,” Narayanan said.
He said 95 per cent of the business comes from repeat contracts and growth is coming from those verticals that are growing, so automatically the business volumes grow.
Joseph Anantharaju, executive vice-chairman of Happiest Minds, said the company posted a 5.4 per cent sequential growth in dollar terms with eight new logos across multiple industries and geographies. “Existing customers have started exploring new initiatives, and are getting to open on spend. The business across all our geographies and opportunities as well have improved. The verticals, especially edutech, retail and hi-tech are witnessing good growth across all our geographies.”
He pointed out that in the last few months, “clients are spending money on areas that directly impact customers or revenues or strategic initiatives around digital, automation, and areas where social distancing presence challenge is. Even in the media space, we are seeing having more spend and customer activity.”
Constant evolution
Anantharaju said the digital space has been constantly evolving. When the company was started, digital technologies were social, mobile, analytics, the cloud and in the next three years, it was all about newer forms of security, IoT, software-defined networking and now it is about blockchain, drones and robotics. “What we have done to stay ahead of the curve is to build capabilities at least 18 months ahead,” the executive vice-chairman pointed out.
He said the company’s positioning as a digital specialist has helped the company to pull more customers into its fold. “The kind of problems we have solved in the past has given us so much of learning that we can take back to our customers. Secondly, the digital space is constantly evolving. Most of our people have some form, one or more digital technologies in which they hold expertise. That helps us when we compete in the marketplace. And again the kind of case studies that we are able to talk and show to the customer helps us.”