Happiest Minds Strategy Driven by Inorganic Growth, Says Anand Rathi

Happiest Minds Technologies is focusing on inorganic growth to drive revenue and expand its sector exposure, according to a report by Anand Rathi. The brokerage said recent acquisitions have helped reshape the company’s revenue mix and opened cross-selling opportunities.

The stock rose 11% on Tuesday after the report was published. Anand Rathi believes the company is now better positioned in verticals such as BFSI and healthcare, supported by its expanding technology stack and M&A activity.

In the fourth quarter of the financial year ending March 2025, the BFSI segment contributed 26.5% to total revenue, compared with 11.4% in Q4FY24. Revenue from the education sector dropped from 22.3% to 17% over the same period.

The company completed three acquisitions—PureSoftware, Aureus, and ME GAVS Tech—for a total investment of $90 million. These deals have created early synergies and are enabling wider service delivery across verticals, according to Anand Rathi.

In FY25, the company’s revenue rose 26.84% to Rs 2,000 crore. However, EBIT fell 4.17%, and EBIT margin declined by 418 basis points. Net profit fell to Rs 184.66 crore, down from Rs 248.39 crore in FY24, due to higher costs.

Finance costs more than doubled to Rs 99.48 crore from Rs 42.27 crore a year earlier. Depreciation expenses increased 52% over the same period.

Happiest Minds remains open to further acquisitions, particularly in cybersecurity. The company is targeting deal sizes between $5 million and $15 million.

The company is also building out its GenAI Business Services unit and expects commercialisation of its Healthcare-as-a-Service (HaaS) offering by FY27.

Management is aiming for double-digit organic growth, while seeking to improve margins through cost controls and operational efficiency.

The stock has garnered buy ratings from five analysts, according to Bloomberg data. Potential return as per consensus is -0.3%. Analysts believe the company’s increasing exposure to BFSI and healthcare, coupled with focused AI-led initiatives, could support long-term outperformance despite short-term pressures.