Irrational exuberance in Happiest Minds

The stock of small-tier IT firm Happiest Minds has more than tripled from its IPO price last September. The heady run has been driven by the firm being benchmarked with global digital players. But this is a stretch and the bubble seems ripe to be pricked

Happiest Minds’ stock is now among the costliest in the Indian IT space in terms of valuation—at 48X trailing earnings

However, its benchmarking with global digital solution providers such as Globant, EPAM, and Endava is incorrect

Competitive pressures and cost increases could take a toll on its growth

There could be a correction in the stock price. Investors would be cautious

Happiness is on steroids—in the Indian stock market, at least.

Even by the standards of the manic, liquidity-driven bull run underway on the bourses, Bengaluru-headquartered small-tier IT services company Happiest Minds Technologies is on a euphoric trip. Its initial public offering (IPO) last September was among the most successful in the Indian market—it was oversubscribed 151 times.

The stock more than doubled on listing and has continued its gravity-defying run. At Rs 540 ($7.5) apiece now, it has more than tripled till date from its IPO price of Rs 166 ($2.3).

AUTHOR

Anand Kalyanaraman

A certified Chartered Accountant, Anand chose to pack the power of numbers with words when he left a career of seven years in accounting, putting together MIS reports, and investment research to enter journalism. Before joining The Ken, Anand was Deputy Editor at The Hindu BusinessLine, a newspaper he worked at for 11 years.

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