HAPPSTMNDS - Happiest Minds Technologies Limited Share Price

The management of Happiest Minds Technologies provided an optimistic outlook, emphasizing strong growth driven by strategic initiatives and market opportunities. Key highlights:

1. Growth Projections: Targeting ~30% YoY revenue growth in FY25 (constant currency) with continued momentum into FY26. Margins are expected to remain within the 20"“22% guidance range.

2. Transformational Initiatives:

   • Generative AI (GenAI): ~15 active proof-of-concept (PoC) projects expected to convert into significant orders in FY26. Focus on integrating GenAI into customer products/services for efficiency and competitive advantage.
   • Verticalization: Six industry groups (e.g., BFSI, Healthcare) aligned with domain experts to drive client-specific solutions.
   • Acquisitions: PureSoftware, Aureus, and GAVS' Middle East business (90+ employees) expanded capabilities in BFSI, healthcare, and infrastructure services. Middle East to become a key contributor.

3. Demand Drivers:

   • Strong traction in BFSI (Arttha banking platform wins), Healthcare (personalized medicine, biosimilars), and Retail/CPG (digital transformation, AI adoption).
   • GenAI demand in high-tech, travel, manufacturing for customer/employee experience optimization.

4. Operational Efficiency: Utilization improved to 78% (from 76.3% last quarter), with campus hires boosting productivity. Focus on scaling margins via non-linear revenue (e.g., Arttha licenses).

5. Challenges: Softness in EduTech (higher education segment) offset by growth in professional development.

6. FY26 Focus: Double-digit organic growth expected through new sales teams, vertical alignment, and GenAI commercialization. Partnerships with Microsoft, AWS, and hyperscalers to drive innovation.

Management remains confident in sustaining industry-leading growth through strategic execution and market differentiation.

Question 1: Can you provide an outlook on the EduTech vertical and its top client? When do you expect a recovery excluding the top client?
Answer: EduTech revenue dipped due to a midsized customer insourcing work and reduced post-development support for a K-12 client. The Higher Education subsegment faces challenges, but strategies include focusing on workforce development (Professional Development) and partnering with universities/platforms. Recovery is expected through diversification, though EduTech may remain slower compared to high-growth verticals like Healthcare and BFSI.

Question 2: How is the pipeline shaping up for the Arttha banking platform? Have deals closed as expected?
Answer: The Arttha platform drove BFSI growth in Q3 with two closed deals. Pipeline remains strong in existing markets (East Asia, Africa) and newer regions (Middle East via GAVS acquisition). India-focused strategies and collaborations with public sector banks aim to expand adoption. Q4 revenue from Arttha is expected to improve with license closures and Middle East market penetration.

Question 3: What progress has been made in adding net new logos?
Answer: The dedicated sales team for net new logos, aligned with verticals, has built a healthy pipeline. Seven new logos were added in Q3, with advanced discussions in North America and India. The team's focus on large accounts and partnerships with hyperscalers is expected to sustain momentum in Q4 and FY26.

Question 4: Is improved pipeline growth due to strategic initiatives or broader market recovery?
Answer: Growth stems from synergies between verticalization, acquisitions (e.g., Arttha in BFSI), and GenAI investments. Acquisitions expanded capabilities, while verticalization enhanced cross-functional collaboration. Market recovery in segments like Healthcare and BFSI complements these initiatives, creating a combined growth catalyst.

Question 5: What is driving margin improvement, and what are the key levers?
Answer: Margins benefited from utilization improvements (78% vs. 76.3% last quarter), Arttha's high-margin licenses, and forex gains. Offsets include GenAI investments and new sales team costs. FY25 margins are projected within the 20"“22% guidance, with further gains expected post-consolidation of acquisitions.

Question 6: How is GenAI revenue defined, and why is growth slower compared to peers?
Answer: GenAI revenue is tracked exclusively under the GBS unit, excluding hybrid projects in other units. Growth appears slower due to a focus on PoCs (15 active) rather than large hybrid deals. Solutions like Investor Relations BOT are being productized for scalability. Efficiency gains from smaller language models (e.g., DeepSeek) and demand uptick are expected to accelerate FY26 growth.

Question 7: Are GenAI productivity benefits passed to clients or retained?
Answer: Efficiency gains (5"“10% via tools like Copilot) are shared via competitive pricing but do not erode margins. GenAI services command premium rates, and demand growth (per Jevons Paradox) offsets pricing adjustments. Margins remain stable, with higher bill rates for pure GenAI projects.