3 takeaways from Happiest Minds' first-quarter results

Ashok Soota, Executive Chairman of Happiest Minds Technologies, said its business is growing in the context of demand being exceedingly good.
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Ashok Soota, 78, has seen so many technology cycles in the enterprise market, as former-President of Wipro, and former Chairman of Mindtree. As Executive Chairman and Co-founder of Happiest Minds Technologies, Soota publicly listed the company almost a year ago.

Happiest Minds clocked Rs 797.7 crore of revenue in fiscal year 2021, and grew 11.7 percent over the previous year. It will complete a decade of operations on August 29. And, Soota believes the demand for technology services is "exceedingly good".

Here are three takeaways from Happiest Minds Technologies' results in the first quarter of the 2022 fiscal:

1. It's driving growth on all fronts.

The company’s total income of Rs 253.9 crore in the first quarter of FY 2022 grew 13.5 percent sequentially, and 35.7 percent over the same quarter a year ago.

However, Happiest Minds Technologies' consolidated net profit of Rs 35.7 crore declined 29 percent compared to a year ago, and was marginally lower than its profit (Rs 36.1 crore) in the quarter ended March 2021.

2.  All revenue segments rose

In fiscal year 2021, over 52 percent of Happiest Minds Technologies' revenue was from product engineering services (PES), with digital business services (DBS) contributing 26 percent, and infrastructure management and security services (IMSS) making up the remaining 22 percent.

But in the quarter ended June 2021, Happiest Minds Technologies fired on all cylinders.

"We have got steady growth from all of the three business units contributing exceedingly well to our overall targets. Every one of them has a good pipeline," Ashok Soota, Executive Chairman of Happiest Minds Technologies, told equity analysts.

DBS grew nearly 65 percent and IMSS grew 44 percent in the period over a year ago, making PES' 23-percent growth look sober.

Even on a sequential basis, DBS and IMSS grew 8 percent and 17 percent respectively in the first quarter of FY 2022.

3. Net addition of 310 employees sequentially

Its headcount stood at 3,538 employees in Q1-FY2022, compared to 3,228 in March 2021, and 2,658 a year ago. At the same time, Happiest Minds' utilisation rate has improved from 74.9 percent a year ago to 82.1 percent.

Its employee cost at Rs 139.3 crore in Q1-FY2022 grew 13.3 percent sequentially, and 28.6 percent over the June 2020 quarter.

"Those numbers are the highest we've ever had," Soota told the analysts on July 30. "Even if we sustain just the current net addition level right through the year, we've increased our numbers and therefore the total billable numbers very significantly."

Edited by Kunal Talgeri