Happiest Minds Technologies Q4 profit up 11%, pegs FY24 guidance at 25%

Its revenue was at Rs 378 crore in the three-month period, up 25.8% YoY. The company also pegged the revenue growth guidance at 25% in constant currency for the fiscal year ending 2024.

On a sequential basis, the net profit remained flat. Its revenue grew 3% from Rs 366.9 crore in the fourth quarter of previous fiscal.

“IT is a strategic business and everybody has to look for new opportunities. That is what digital is all about. I can’t remember any initiative being taken which is other than to grow their (clients’) market or sustain businesses,” Happiest Minds’ executive chairman Ashok Soota said on the guidance and on whether more cost-saving deals are now in the market.

The management also said, unlike peers, most of their clients’ spends are core and critical due to digital-nature and it does not come under the “discretionary” budgets.

It achieved 23.7% constant currency revenue growth in FY23–slightly lower than its guided range of 25%. But the company said the miss was due to “right shifting” or the revenue difference may be recognised in the coming quarters.

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Large IT companies have different challenges of growth as if a $10 billion dollar has to grow at 5% every year, they need to add a business of the size of Happiest Minds, Soota said. “Luckily, we don’t have that challenge and won’t have it for a long time. We need to add just $50 million revenue every year for 25% yearly growth,” he said.The company’s net profit was up 27.5% to Rs 231 crore, while revenue was higher by 30.7% to Rs 1,429.3 crore in FY22 from the previous fiscal.

The operating margin for the quarter was down 30 basis points to 26%. It also clocked 26.2% for FY23–exceeding the 22-24% guided range for the year.

“The 22-24% is a stable margin range. We had tailwinds because of COVID-19 and work from home followed by rupee depreciation. If there is a requirement to invest in technology or a geography or even acquisition, the margin has headroom for the those factors as well ,” Happiest Minds Technologies MD and CFO Venkatraman N said.

Its headcount was at 4,917, adding around 749 people for the year on a net basis. Its trailing 12 months attrition at 19.8% from 20.9% sequentially.

The Bengaluru-based firm said the company will add 1,300 jobs for the ongoing fiscal that includes 450 campus hires.

“This is not the first time it is happening (onboarding delays). There is a history of a lot of companies delaying it..I would rather take a 1% hit on profitability and say we will honour all offers. Each entity has got to take its own decision,” Soota said when asked about the fresher onboarding delays that the IT sector has been facing.