Happiest Minds IPO subscribed nearly 3 times on day 1; retail quota subscribed over 14 times

Riding on huge retail demand, the Rs 702 crore initial public offer (IPO) by Happiest Minds sailed through in just over two hours into the bidding process on Monday.

The issue received bids for 6,67,09,800 shares, which was 2.87 times the issue size of 2,32,59,550 shares, data compiled from NSE and BSE showed.

Retail quota was subscribed over 14 times. NII quota was subscribed 62 per cent, while the quota for QIBs was subscribed 8 per cent.


The digital company, whose issue is being sold in Rs 165-166 price band, raised Rs 316 crore on Friday from 25 anchor investors including Government of Singapore, Goldman Sachs, Kuwait Investment Authority, Nomura Funds Ireland, Jupiter India and Pacific Horizon Investment. At the upper price band, the issue is seeking a valuation of 26.76 times FY20 earnings per share.

With services such as cloud and security and analytics accounting for 97 per cent of its revenues, the Bengaluru-headquartered firm is being touted more as a digital services firm than legacy IT players, which have 35-50 per cent of revenues coming in from the segment.


Motilal Oswal Securities said that the company's valuations are comparable to larger mid-sized IT companies. It likes the company given its strong presence in digital services, business model with end-to-end capabilities and fast improving financial performance.

"Investors can 'Subscribe' to the IPO. Further considering market conditions and bright prospects for IT companies post Covid-era, one may also get listing gains," the brokerage said.

Angel Broking said that given the high exposure to digital services and strong promoter background, the company will continue to grow at a faster pace as compared with similar sized companies and, therefore, should command a premium valuation to the peer group.

Choice Broking said the issue seems to be fully priced compared with its domestic peers, the brokerage said. But it noted that the company cannot be fully comparable with the domestic IT peers. "There are international peers, who derive almost all of their revenue from digital services, trading at a P/E multiple ranging from 67-139 times. Assuming the valuations of these companies in the US markets to be frothy, the valuation demanded by Happiest Minds seems to be attractive," it said.