Around 1.35 lakh small investors enter Happiest Minds in June quarter

KS Badri Narayanan Chennai | Updated on July 22, 2021

FPIs, MFs cut stake amidst zooming share price

At a time when professional investors like foreign portfolio investors, mutual funds, and HNIs are reducing their stake, for retail investors, Happiest Minds Technologies seems to be a happy hunting ground.

Even as the stock has been climbing sky-high, almost 1.35 lakh new individual investors have entered the stock during the quarter ended June 2021. Their holding has increased from 16.96 per cent to 23.02 per cent during quarter.

Triples in 100 days

The stock from ₹540.10 on March 31, closed at ₹1,004.10 on June 30, which was an all-time high at that time. However, since June, the stock further climbed to reach a feverish high of ₹1,580.80 on July 19 on the BSE and currently ruling at ₹1,491.55.

Since retail shareholders are heterogeneous, it is very difficult to ascertain whether the same people are holding the shares or fresh ones have entered.

"As the stock climbed further 50 per cent since June end, it will be interesting to see whether June-September quarter shareholding patten, whether they booked profits or still holding," a Chennai-based market veteran, said.

According to him, the pedigree of promoter and relatively strong financial performance have been key attractions for Happiest Minds. investors give premium to promoter Ashok Soota, who co-founded Mindtree, which is now acquired by L&T.

On exit mode

During the quarter, mutual funds reduced their stake from 6.57 per cent to 3.26 per cent. Schemes such as L&T Emerging Business Fund, Sundaram Small Cap Fund and SBI Magnum Midcap fund have their completed exited from the scheme or reduced significantly lower much below one per cent.

Similarly, Goldman Sachs, under FPI category, cut the stake in Happiest Minds. It was holding 1.03 per cent at the end of March 2021. Government of Singapore reduced its holding to 1.88 per cent (2.57 per cent). Overall, FPIs holding got reduced from 7.07 per cent to 6.23 per cent.

According to a company clarification, Nuggehalli Krishnamacharya Sriranganarayanan, who has been holding 3.88 per cent stake since listing, continues to hold shares in his name as Trustee of the ESOP Trust.

For the quarter ended March 2021, Happiest Minds posted a profit of Rs 36.92 crore on revenues of Rs 208.26 crore. For FY21, it had posted a PAT of ₹161.93 crore and revenues of Rs 760.96 crore.

Global brokerage firm Nomura, in fact, downgraded the stock to Reduce from Buy on May 14.

"We lift revenues by 4-5 per cent following the strong beat in 4Q and raise EBIT margins by 10-40bp for FY22/23F. However, our EPS is up only 1-2 per cent due to lower yield assumptions. We now value Happiest Minds on a higher multiple of 40x (vs 32x) on 1-yr fwd EPS to arrive at our TP of ₹6 30 (vs ₹480 earlier)."

The company came out with a ₹702-crore IPO in September 2020 at an issue price of ₹166. The IPO was subscribed by 151 times. Those who are holding since IPO, the return would have been almost 10 times.

Published on July 21, 2021

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