HAPPSTMNDS - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.5
| Stock Code | HAPPSTMNDS | Market Cap | 6,349 Cr. | Current Price | 417 ₹ | High / Low | 774 ₹ |
| Stock P/E | 31.0 | Book Value | 102 ₹ | Dividend Yield | 1.44 % | ROCE | 13.9 % |
| ROE | 12.3 % | Face Value | 2.00 ₹ | DMA 50 | 457 ₹ | DMA 200 | 545 ₹ |
| Chg in FII Hold | 0.50 % | Chg in DII Hold | -0.58 % | PAT Qtr | 56.2 Cr. | PAT Prev Qtr | 40.5 Cr. |
| RSI | 36.5 | MACD | -17.2 | Volume | 5,02,370 | Avg Vol 1Wk | 4,88,562 |
| Low price | 395 ₹ | High price | 774 ₹ | PEG Ratio | 620 | Debt to equity | 0.80 |
| 52w Index | 5.78 % | Qtr Profit Var | 31.0 % | EPS | 12.0 ₹ | Industry PE | 23.9 |
💹 Core Financials: Happiest Minds shows moderate profitability with ROE at 12.3% and ROCE at 13.9%. Debt-to-equity ratio of 0.80 indicates relatively high leverage compared to peers. Quarterly PAT improved from ₹40.5 Cr. to ₹56.2 Cr., reflecting strong growth momentum (31% variation). Dividend yield of 1.44% provides modest income. EPS at ₹12.0 highlights steady earnings, though margins remain under pressure.
📊 Valuation Indicators: Current P/E of 31.0 is above the industry average of 23.9, suggesting overvaluation. Book value of ₹102 against CMP of ₹417 implies a P/B ratio of ~4.1, which is high. PEG ratio of 620 indicates valuation is extremely stretched relative to growth prospects. Intrinsic value appears lower than CMP, pointing to limited upside at current levels.
🏢 Business Model & Competitive Advantage: Happiest Minds operates in IT services, digital transformation, cloud, and cybersecurity. Its competitive advantage lies in niche focus on digital-first solutions, strong client relationships, and agility compared to larger peers. However, scale limitations and higher debt levels reduce resilience against industry pressures.
💰 Entry Zone Recommendation: Considering DMA 50 at ₹457 and DMA 200 at ₹545, the stock is trading below both averages, showing weakness. A favorable entry zone would be ₹390–₹410 during corrections. Current levels remain slightly overvalued relative to intrinsic metrics.
📈 Long-Term Holding Guidance: Happiest Minds has growth potential in digital services but faces valuation concerns and leverage risks. Long-term investors can hold cautiously, while new investors should wait for dips to improve risk-reward balance.
Positive
- Quarterly PAT growth of 31% shows strong momentum.
- Dividend yield of 1.44% provides modest income.
- Strong positioning in digital-first IT services.
- FII holdings increased (+0.50%), showing foreign investor confidence.
Limitation
- ROE (12.3%) and ROCE (13.9%) are moderate compared to peers.
- P/E ratio (31.0) is higher than industry average (23.9).
- PEG ratio of 620 indicates extreme overvaluation relative to growth.
- Debt-to-equity ratio of 0.80 is relatively high.
Company Negative News
- Decline in DII holdings (-0.58%) signals reduced domestic institutional support.
- Stock trading below DMA 50 and DMA 200 indicates technical weakness.
Company Positive News
- Quarterly PAT improved significantly from ₹40.5 Cr. to ₹56.2 Cr.
- Increase in FII holdings (+0.50%) reflects foreign investor confidence.
- Strong demand for digital transformation services supports growth outlook.
Industry
- IT services industry benefits from global demand for digital transformation and cloud adoption.
- Industry P/E at 23.9 suggests peers trade at more reasonable valuations.
- Competition from larger players like Infosys, TCS, and Wipro creates pricing pressure.
Conclusion
⚖️ Happiest Minds is a growth-focused IT services company with strong digital positioning, but valuations are stretched and leverage is relatively high. Long-term investors can hold cautiously, while new investors should wait for corrections towards ₹390–₹410 for better entry opportunities.
I can also prepare a side-by-side HTML comparison with peers like Mindtree and Persistent Systems to highlight relative strengths and weaknesses if you'd like.