scorecardresearchThis midcap IT stock has surged around 600% from its issue price; should you still buy?

This midcap IT stock has surged around 600% from its issue price; should you still buy?

Updated: 22 Mar 2022, 01:38 PM IST
TL;DR.

The stock has skyrocketed as much as 591 percent from its issue price of 166 to currently trade around 1,147.

The stock has skyrocketed as much as 591 percent from its issue price of  <span class='webrupee'>₹</span>166 to currently trade around  <span class='webrupee'>₹</span>1,147.

The stock has skyrocketed as much as 591 percent from its issue price of 166 to currently trade around 1,147.

Happiest Minds Technologies has delivered solid returns since its listing in September 2020. The stock has skyrocketed as much as 591 percent from its issue price of 166 to currently trade around 1,147.

An investor who would have bought the shares of the IT firm during the IPO would have gotten tremendous returns. An investment of 15,000 during the IPO would have turned to 1.03 lakh currently.

The firm made one of the best debuts in 20 years, listing at over 100 percent premium to its issue price at 351. Since listing, the stock has jumped 226 percent. In the last 1 year, the scrip has surged 115 percent and 16 percent just in March 2022 YTD.

The stock has outperformed both the Nifty and Nifty IT index in the last 1 year as well as in March 2022 till date.

The Nifty IT index has added 38 percent in the last 1 year and 5 percent in March till date. Meanwhile, benchmark Nifty is up 16 percent in the last 1 year and around 1.5 percent in this current month.

Promoted by Ashok Soota, Happiest Minds is a Bengaluru-based Technology is a next-generation digital transformation, infrastructure, security and product engineering services company that provides end-to-end transformative digital solutions to its customers.

Despite the steep surge since listing, the brokerages continue to be bullish on the stock. As per analysts, robust growth across verticals, as well as robust deal wins and a healthy deal pipeline, will lead to the overall growth of the firm's business. Further, the Ashok Soota factor, who is a big name in the IT industry, also works in favour of the firm.

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Share price journey of Happiest Minds. 

Domestic brokerage house KR Choksey recommends buying the stock and has a target price of 1,510, indicating an around 32 percent upside from its current market price.

"The company has given a clear indication about robust deal wins and healthy pipelines backed by the digital services. In terms of geography, Americas & India businesses witnessed positive growth on a QoQ basis and have witnessed skewed deal wins/healthy pipelines, especially in Hi-Tech, Industrial and manufacturing. Focus on the smaller accounts are playing well for Happiest Minds and has successfully managed to mine more from the existing clients as three $1-3 million clients have moved up to $3-5 million in Q3FY22," noted the brokerage.

Choice Broking also believes that the stock has yielded staggering returns since listing due to superior top-line growth and margin execution.

“With Vision 2030 and stable management at the helm, we believe the company will remain in a high growth phase in initial years, thereby attracting a higher valuation multiple,” Choice Broking said in a report.

In the December quarter, the firm reported a 16.1 percent rise in its net profit to 48.92 crore versus 42.15 crore posted in the year-ago period. Its revenue in Q3 also rose 47.2 percent to 283.94 crore as compared with 192.84 crore in the year-ago period.

The company has also been the top performer amongst its largecap as well as midcap peers in the last 1 year. After Happiest Minds, Mindtree has given the best performance, up 100 percent in the last 1 year. Among other midcap IT firms, Mphasis is up 89 percent, Coforge 52 percent, L&T Infotech 48 percent and Oracle Fin Services 11 percent. Among largecaps IT stocks, Tech Mahindra has jumped the most in the last 1 year, up 48 percent followed by Wipro at 45 percent, Infosys 36 percent, HCL Tech 20 percent and TCS 16 percent.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.

 

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First Published: 22 Mar 2022, 11:54 AM IST