600% up from issue price, 115% in 12 months; should you buy this multibagger?

Ashok Soota-led Happiest Minds have managed to double investors’ money in the ongoing financial year due to industry-leading revenue growth. Shares of the company rallied 115 per cent to Rs 1,159.45 on March 17, 2022 from Rs 540.10 on March 31, 2021. On the other hand, the benchmark BSE Sensex gained nearly 17 per cent during the same period.   

For the latest quarter ended December 31, 2021, Happiest Minds Technologies reported a 16.1 per cent growth in consolidated net profit to Rs 48.92 crore. It had posted a net profit of Rs 42.15 crore in the year-ago period. Its revenue during October-December 2021 increased 47.2 per cent to Rs 283.94 crore as compared with Rs 192.84 crore in the year-ago period.

Earlier, the company managed to make a stellar debut on bourses in September 2020. At present, the scrip is hovering at nearly 600 per cent premium against the issue price of Rs 166. According to Choice Broking, the stock has yielded staggering returns since listing due to superior top-line growth and margin execution.

“With Vision 2030 and stable management at the helm, we believe the company will remain in a high growth phase in initial years, thereby attracting a higher valuation multiple,” Choice Broking said in a report.

Price-to-earnings ratio of Happiest Minds was at 105.64 on March 17, while the ratio for IT leaders including TCS, Infosys and HCL Technologies were hovering at 37.18x, 38.03x and 38.99x, respectively.

KR Choksey retained a bullish view of the company with a target price of Rs 1,510, indicating an upside of 30 per cent from the current market price.

Commenting on Happiest Minds, the brokerage said, “As much as 96 per cent of the total revenue comes from digital business and agile contributes 93 per cent of the total revenue. Digital infrastructure and security solutions are showing positive traction mainly because the company has set up various CoE with specialized employees to address the right customers.”

Happiest Minds is a digital transformation IT consulting and services company with capabilities in big data, analytics, cloud, mobility and security enabling end-to-end solutions for their clients in the digital space.

Chandan Taparia, head-technical and derivatives research, Motilal Oswal Financial Services said, “The stock is likely to stay positive to range-bound. The stock may move in the range of Rs 1,250-1,300. However, it can find support at Rs 1,100.”