Target: ₹945

CMP: ₹884.75

Happiest Minds reported Q3-FY24 revenues at $49.4 million, up 0.8 per cent q-o-q and 9.4 per cent y-o-y in cc terms. In $ terms, reported revenue was up 0.5 per cent q-o-q and 9 per cent y-o-y. INR revenue stood at ₹409.90 crore, up 0.8 per cent q-o-q and 11.7 per cent y-o-y.

The results were on the back of lesser working days, longer-than-usual furloughs, and pockets of softness in demand. However, the growth was led by its Product Engineering Services and Digital business unit, while the performance of IMSS business was impacted by a few ramp-downs and delayed starts.

Reported PAT for the quarter came in at ₹59.60 crore, up 2 per cent q-o-q and 3.5 per cent y-o-y, whereas reported basic EPS for the quarter is ₹3.9.

The environment continues to see softness, however, meaningful opportunities of size and scale still exist in the areas of cloud migration, core modernisation, digital transformation, cybersecurity, analytics and AI.

Happiest Minds is well positioned to tap into these opportunities by building capabilities ahead of time and through its consulting-led approach. We expect Revenue/EBIT/PAT to grow at a CAGR of 17.6/17.6/20.3 per cent respectively over FY23-26. We maintain our Add rating with a revised target price of ₹945 from ₹920.