“We have started verticalisation and are going to create five to six verticals…We expect these vertical/industry group heads and self-contained units to be engines of growth,” said Joseph Anantharaju, Executive Vice Chairman at Happiest Minds.
Currently, the Bengaluru-based software services firm does not spell out separate industry groups’ business growth numbers.
Its businesses which have grown include: hi-tech with share of revenues at 14.3%; BFSI – banking, financial services & insurance (10.9%); travel, media & entertainment (TME) (11.7%), healthcare (14.8%), retail/CPG (7.6%) and highest share increase by over a per cent in manufacturing (7.4%). However, its largest vertical edutech degrew by a per cent to 24%, along with industrial (6.8%) and other segments.
The company also has digital service offerings led by digital infrastructure/cloud and SaaS (software as a service).
Last week, the publicly listed mid-cap software services firm reported a 3.5% year-on-year rise in net profit at Rs 59.6 crore for the third quarter ending December 31, 2023. The profit stood at Rs 57.6 crore a year ago and rose 2% to Rs 58.5 crore in the preceding quarter.
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Its revenue rose 11.7% to Rs 409.9 crore compared to Rs 366.9 crore in Q3FY23.The firm is also pulling out the new sales into a separate structure “Earlier we had hybrid BDMs (business development managers) and hence new logo (client) acquisition will be more focused. Therefore, we expect the efficacy and the output to be that much better,” Anantharaju stated.
Gen AI and region expansion
Like all other IT firms, Happiest Minds is also emphasising its focus on GenAI with a business unit to get newer clients and logos.
Under the GenAI business unit, Anantharaju said the company is training a team of 100 people in the latest technologies including AI, open source models with data understanding to singularly focus on getting more specialization and execution, expecting it to generate business in FY25.
The firm’s chief technology officer Sridhar Mantha has taken charge to become the new president & CEO for its Generative AI business services unit and board member Rajiv Shah as the president & CEO Digital Business Services.
Further, Happiest Minds also aims to expand its India business, which presently has grown from 15.7% in the previous quarter to 16.4% in Q3FY24.
With a huge gap, India business is second to the largest geography USA at 70.3%, which reduced from 71.5% in the July to September period. Europe and rest of the world make up for 9% and 4.4%, respectively.
M&A pipeline
Founded by IT veteran Ashok Soota, Happiest Minds is in its 14th year and is now also expanding with a good M&A pipeline with appetite to invest around $100 million.
Since 2017, the firm has made four small acquisitions with the latest being Madurai-based SMI for Rs 111 crore (about $13 million) in January last year.
Now, the firm is looking to invest in around 2-3 companies in the range of $10-40 million each.
“This quarter, we’ve got a decent pipeline…We are really looking to add to our competence capabilities. We are in discussions and are likely to close one this quarter,” said Venkatraman Narayanan, MD and chief financial officer at Happiest Minds.
In July 2023, the company also beefed up its cash reserves by raising Rs 500 crore (around $61 million) through a qualified institutional placement (QIP) of equity shares.
