Happiest Minds Technologies Ltd Q1 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Sumeet Jain - ICICI Securities Limited - Analyst : Thanks. Congrats on a good growth this quarter. So my first question is actually on the margin side. If I look at your employee costs that were a bit elevated this quarter despite no wage hikes announced in the quarter. So any particular reasons for the elevated cost of revenue this quarter?

Question: Sumeet Jain - ICICI Securities Limited - Analyst : Got it. Can you also comment around your hiring outlook for the year? I guess you mentioned around 1,300 fresher hiring for the full year. And I think contrary to a lot of other IT companies, we have seen at least a headcount growth for you. So can you just comment around both fresher hiring target as well as lateral hiring based on the demand?

Question: Sumeet Jain - ICICI Securities Limited - Analyst : Got it. Thanks for the clarity. I think another question is more for longer-term strategic outlook. I think when you gave a target of around $1 billion by FY 2031, I just wanted to understand how much you want to grow by mining existing clients, where you already have 240, 250 customers, and how many number of more clients you want to add. And within that client context, if you can also give us a brief highlight as to how many Fortune 500 or G2000 clients you have, which you can scale up substantially over the next 8 to 10 years.

Question: Sumeet Jain - ICICI Securities Limited - Analyst : Got it. And just last question from my end is, in the scaling up of the results, how will be your focus on different industry verticals, given that edutech is the biggest vertical for us right now? But if you look at the global IT services space, this is very small vertical overall, and the BFSI and the retail verticals which are very big globally, but are still small for you, the competition is very high but then the scalability opportunity is there for you. So I just wanted to understand how you want to scale up your individual industry vertical segments, and if any inorganic opportunity you get, what will be your focus on the M&A side?

Question: Sumeet Jain - ICICI Securities Limited - Analyst : Great. Thanks a lot for taking my questions. Thanks a lot.

Question: Dipesh Mehta - Emkay Global Financial Services Ltd - Analyst : Thanks for the opportunity. A couple of questions. First, about the Q1 performance. Whether it was in line with what management expected. Because last time, you said some kind of right shifting of revenue which impacted Q4 performance and you expected Q1 performance to be in line with your full-year guidance. So just want to get sense about it, and if I would exclude acquisition, then YoY growth seems to be in single-digit. So just want to get your perspective whether Q1 played out the way you expected. Second question is about just want to get a perspective on your HiTech and travel media and entertainment vertical, it seems to be some kind of softness, partly HiTech has impacted because of reclassification. But otherwise, also, it seems to be weak. So if you can give some perspective. And the last question is about top two to five client seems to be weak. Last time, also, I think it was showing some kind of softness, but it seems to be temporary. But I think that weakness persists, so if you can give some insight. Thank you.

Question: Dipesh Mehta - Emkay Global Financial Services Ltd - Analyst : Understood. Just last question is about the demand environment compared to, let's say, over last few months. Any improvement you are witnessing or you are still witnessing more or less same kind of client behavior in terms of elongated sales cycle, as well as client are very cost sensitive in terms of spending? So if you can give some perspective. Thank you.

Question: Manik Taneja - Axis Capital Ltd. - Analyst : Hi. Thank you for the opportunity. While on the revenue growth guidance, you've said that you will simply look to update us after second-quarter numbers. My question was with regards to the way we should be thinking about the medium-term outlook for our margins. Given the fact that, in Q1 FY24 itself, our margins are probably down about 350 basis points on year-on-year basis, and we are yet to implement waging increments, I do understand there is an element of investment in freshers. But how should we be thinking about our medium-term operating margin outlook?

Question: Manik Taneja - Axis Capital Ltd. - Analyst : Sure. And the second question was in regard to -- just a clarification on the way number of days essentially impact our sequential growth. Given the fact that almost 75% of the business eventually is on T&M billing, how should we be thinking about -- what impact did it have in Q1, and simultaneously, how should we think about the higher number of working days in September quarter?

Question: Manik Taneja - Axis Capital Ltd. - Analyst : Sure. And would there be one higher working day on a sequential basis between July, August, September, and April, May, June?

Question: Manik Taneja - Axis Capital Ltd. - Analyst : I'm saying, July, August, September, which is your Q2 of fiscal year. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 09, 2023 / 3:30AM, HAPP.NS - Q1 2024 Happiest Minds Technologies Ltd Earnings Call

Question: Manik Taneja - Axis Capital Ltd. - Analyst : Sure. Thank you for the clarification.

Question: Utkarsh Katkoria - PGIM India Mutual Fund - Analyst : Thank you for taking my question. I'm sorry if I missed the first few minutes in the beginning. I just wanted your thoughts on your long-term revenue growth outlook, where we see the company, let's say, five years from now and beyond, and what would be the drivers, which verticals, and how we try to get there. Thanks.

Question: Utkarsh Katkoria - PGIM India Mutual Fund - Analyst : Got it. Thank you so much for that. Thank you.