Happiest Minds makes ₹111 cr acquisition
2 min read . Updated: 25 Jan 2023, 10:16 PM IST
PremiumAs part of the transaction, Happiest Minds will absorb more than 400 employees of SMI, based in offshore locations.
NEW DELHI : Happiest Minds Technologies Ltd on Wednesday announced the acquisition of Madurai-based IT services firm Sri Mookambika Infosolutions (SMI). The deal comprised upfront and deferred equity payments totalling ₹111 crore.
As part of the transaction, Happiest Minds will absorb more than 400 employees of SMI, based in offshore locations. The Bengaluru-based IT services firm has 4,611 employees as of December-end.
Happiest Minds said, in a regulatory filing, that SMI is a ‘profitable’ company with an annual revenue run rate of $9 million as of FY22. “SMI brings deep domain capabilities, which add to our healthcare vertical strength — and align well with our ‘Product Engineering Services business unit," said Joseph Anantharaju, executive vice-chairman and chief executive of Product Engineering Services at Happiest Minds. Venkatraman Narayanan, managing director and chief financial officer at Happiest Minds, said SMI will add “expertise in healthcare, and a vibrant talent pool in the burgeoning tier-II locations of Madurai and Coimbatore," to the company’s portfolio.
SMI mostly caters to companies based in the US, according to Happiest Minds.
Ahead of the announcement, shares of Happiest Minds closed 1.67% lower at ₹861.80 apiece almost tracking a 1.27% drop in the benchmark index Sensex.
In the fiscal third quarter, Happiest Minds posted a 3.2% sequential rise in rupee revenue to ₹366.88 crore in the December quarter. Net profit fell 3.1% sequentially to ₹57.58 crore, while operating margin shrank by 110 basis points to 15.4%. The company also reported attrition of 20.9%, while net employee utilization declined by 50 basis points sequentially to 80.1%. The company added nine deals in the December quarter.
Anantharaju said, in a statement during the Q3 financial results, that the company expects to continue to grow since clients “are investing heavily in cloud, experience and analytics as part of their strategic digital initiatives."
“Our technology depth has resulted in a strong pipeline of large deals, many of them with Fortune 500 companies," he added.
The bullish forecast comes amid a period of consistent deal signing for the IT services sector in a quarter that has been traditionally weak.
Brokerage BNP Paribas said in a note on IT services deals that digital services, including cloud and automation sectors, remained the key driver for deal signings for the entire sector.
“Deal signings improved in North America, and were decent in Europe and the rest of the world as well," said Kumar Rakesh, vice-president of equity research at BNP Paribas.