Happiest Minds Technologies, the Bengaluru-based IT company with major focus on US market, is closely watching economic conditions in that country as concerns over a potential recession and stagflation affect client decision-making, according to Venkatraman Narayanan, MD & CFO. While no major spending cuts have been made yet, companies remain cautious, which could impact future business deals, he says.
Despite these concerns, Narayanan continues to push for growth. The company initially estimated a 30-35% revenue increase, but reaching 30% in 2024-25 (FY25) now seems difficult. Delays in the integration of acquired companies and finalising deals have played a role in this challenge.
Joseph Anantharaju, Executive Vice Chairman & CEO, of PDES at Happiest Minds Technologies believes that even with economic uncertainty, demand for IT services remains steady. Most client renewals have been completed, and new projects continue as planned. While some delays in decision-making have been observed, there is no significant pullback in spending at this point, he said.
Looking ahead, the company remains committed to its long-term goal of hitting $1 billion in revenue by 2031. However, adjustments may be necessary depending on market conditions. The management is tracking industry trends to stay on course.
Happiest Minds is also focused on maintaining financial stability, said Narayanan. The company aims to keep EBIT margins between 20% and 22% and earnings before interest, taxes, depreciation and amortisation (EBITDA) margins around 18%. Investments in artificial intelligence and banking solutions could temporarily affect these numbers, but they are expected to drive growth in the long run.
The company is investing in Artha Banking for digital transformation in BFSI and in Generative AI (GenAI), with an expected combined investment of $5-6 million next year.
The company has also been managing the impact of recent acquisitions. The integration of PureSoftware and Gavs customers in the Middle East has taken longer than expected, slightly affecting revenue timelines. However, management is working to streamline operations and maximise the benefits of these additions.
The company, which has a current market capitalisation of ₹10,366.87 crore, has seen its shares lose more than 13% over the last year.
For the full interview, watch the accompanying video
Catch all the latest updates from the stock market here
Content retrieved from: https://www.cnbctv18.com/business/happiest-minds-growth-challenges-us-market-uncertainty-recession-19573062.htm.
