Target: ₹560
CMP: ₹378.75
Happiest Minds reported Q4FY26 revenues of ₹604.10 crore, (vs our estimate of ₹645.50 crore), up 2.8 per cent q-o-q and 10.9 per cent y-o-y. In USD terms it reported degrowth of 1.1 per cent q-o-q in revenues at $65.0 milion.
For FY26, INR revenues stood at ₹231.50 crore, up 12.3 per cent y-o-y, while the USD revenue stood at $265.8 million, up 9.1 per cent YoY. EBIT Margin came in at 13.6 per cent for Q4-FY26, declining 90 bps q-o-q (vs CIE estimate of 15.6 per cent). For the full year, EBIT margin stood at 13.6 per cent, up by 70 bps y-o-y.
PAT for the quarter came in at ₹6.12 crore, up by 51.8 per cent QoQ and 32.5 per cent y-o-y. For the full year, PAT stood at ₹21.26 crore, up 8 per cent y-o-y.
Margin remained stable at 17.5 per cent, aided by improved utilisation and operational efficiency, though continued AI investments may keep near-term profitability range-bound. We believe execution on AI monetisation, platform scaling-up and margin discipline will remain critical for sustaining growth momentum. The management expects margin to improve by about 100 bps over time, targeting an operating margin range of 17.5-18.5 per cent.
Accordingly, we expect Revenue/EBIT/PAT to respectively expand at a CAGR of 16.5/21.2/25.6 per cent over FY26–FY29E. While we maintain our ‘Buy’ rating, we revise our target price to ₹560 (earlier ₹620), based on the FY28E EPS.