How Did Happiest Minds Deliver Double-Digit Growth and Margin Expansion in Q2 FY26?
About Happiest Minds Technologies: A digital transformation and IT services company founded by Ashok Soota, Happiest Minds focuses on cloud, analytics, security, and AI-driven automation. It continues to position itself as a high-growth, niche digital player with strong mid-cap IT momentum.
In the Q2 FY26 concall, management reaffirmed double-digit revenue growth guidance through FY28, maintaining EBITDA margins in the 20–22% band. The company highlighted robust demand from BFSI and healthcare clients, alongside early benefits from GenAI integration across projects.
Q2 FY26 Key Highlights
| Metric | Q2 FY26 | YoY Change |
|---|---|---|
| Revenue | ↑ 20% | ↑ 25.2% |
| EBITDA Margin | 21.5% | ↑ 90 bps |
| PAT | ₹310 Cr | ↑ 84% |
| Attrition | 26.3% | Stable QoQ |
Strong execution in AI-led projects and the seasonal uptick in BFSI deals aided margin expansion. The company noted that H2 would contribute 53–54% of FY26 revenue due to large renewals and new client onboarding in the payer and provider segments.
Peer Comparison (Digital-First Midcap IT)
| Metric | Happiest Minds | Coforge | LTIMindtree | Persistent |
|---|---|---|---|---|
| CMP (₹) | 880 | 6,150 | 5,420 | 4,980 |
| P/E (x) | 52 | 36 | 40 | 44 |
| ROE (%) | 27 | 25 | 24 | 23 |
| Revenue Growth (%) | 20 | 14 | 13 | 16 |
Despite a premium P/E, Happiest Minds continues to justify its valuation through consistent digital focus and lean operations. Its niche strength in AI-based automation and platform integration gives it a differentiated moat within the mid-cap IT universe.
Valuation Metrics Overview
| Metric | Current | Historical Range | Comment |
|---|---|---|---|
| P/E | 52x | 40–65x | Premium vs peers; justified by superior growth |
| EV/EBITDA | 32x | 26–35x | Healthy multiple supported by digital leadership |
| ROE | 27% | 22–28% | Efficient capital usage maintained |
| Dividend Yield | 0.7% | 0.5–1.0% | Low payout; growth reinvestment focus |
Analysts see steady demand tailwinds for cloud, cybersecurity, and AI integration across BFSI and healthcare verticals. The company expects GenAI to contribute 6–8% of incremental productivity gains by FY27, helping sustain margin expansion.
Investment Horizon Verdict
Short Term (1–3 months): May remain range-bound between ₹820–₹900 amid mid-cap IT volatility.
Medium Term (3–9 months): Accumulate on dips; steady project ramp-ups and GenAI monetization likely to drive re-rating.
Long Term (9+ months): Structural compounder in digital services with strong cash flow visibility and industry tailwinds.
Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, believes Happiest Minds’ digital-first model offers durable compounding potential. The stock remains suitable for medium- to long-term investors seeking AI-led technology exposure rather than short-term momentum plays. Keep exposure minimum as we are not much optimistic on stock.
Explore more insights at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries on IT Stocks
- Is Happiest Minds overvalued compared to peers like Coforge and LTIMindtree?
- Will GenAI adoption enhance profitability for mid-cap IT firms?
- Which IT stocks show long-term compounding potential in FY26?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
