Happiest Minds Technologies Ltd Q3 FY23 Earnings Conference Call Insights

Key highlights from Happiest Minds Technologies Ltd (HAPPSTMNDS) Q3 FY23 Earnings Concall

Q&A Highlights:

• [00:18:38] Manik Taneja from Axis asked about the annual growth outlook given the 3Q moderation and the mention of one-offs affecting holidays and working days. Venkatraman Narayanan CFO said the company has considered that some leave days are lost and won’t be regained. HAPPSTMNDS reviewed its pipeline and are holding steady at 26%, above its 25% guidance for top-line numbers. HAPPSTMNDS said it’s confident of meeting the target.

• [00:20:17] Abhishek Bhandari at Nomura enquired if the company has plans to reduce margins and invest in sales to potentially accelerate growth in the medium-term. Ashok Soota EC replied that HAPPSTMNDS seeks to increase revenue and develop technologies through new investments, without reducing prices. This strategy has proven successful, leading to a continuous pursuit of new investment opportunities.

• [00:23:18] Vimal Gohil from Alchemy Capital queried about 3Q cost as the company hired many freshers, but employee growth outpaced revenue growth and if deploying more freshers would increase margins further. Ashok Soota EC said HAPPSTMNDS hired 220 freshers last quarter who will undergo training for 9-12 months before becoming billable. Costs associated with their training and pay won’t affect profitability for the next two quarters. It will improve HAPPSTMNDS competitiveness and help manage its pyramid after becoming billable.

• [00:27:30] Vimal Gohil from Alchemy Capital asked about the spending on acquisition of land and delivery center. Ashok Soota EC said it’s a state-sponsored scheme in Bhubaneswar where land is being given for SEZ. HAPPSTMNDS has received an in-principle allotment at a favorable price and is reviewing the terms and conditions. The lease will be for 100 years, and the land cost will not be significant.

• [00:29:33] Faisal Hawa from H.G. Hawa enquired which two or three adjacencies are necessary to fill up through an acquisition or other means that the company is lacking. Ashok Soota EC replied the company’s plan is to expand through acquisitions in various areas, including verticals, horizontals, and geos. The company has a process of starting with 50 options and narrowing it down to a shortlist of five, with the possibility of only one or two acquisitions. While the company has achieved this year’s growth rate, it hopes to make some deals in the future.

• [00:42:50] Manik Taneja from Axis Capital asked if there is a possibility that the growth rates in near term will be lower than the projected 25% CAGR and if that would impact the $1 billion goal in revenue by 2031. Ashok Soota EC replied that the impact of acquisitions on this goal is not clear, but the company has mostly grown organically and is not experiencing a slowdown in demand. HAPPSTMNDS is optimistic that any fluctuations from organic growth will be offset by acquisitions.