Happiest Minds Technologies’ share price rallied over 290 percent in the last 6 months, but it has slipped after the company reported its June quarter earnings. The company posted strong revenue growth, but the margin contracted owing to wage hikes.
CNBC-TV18's Reema Tendulkar spoke with the management of Happiest Minds Technologies, Venkatraman Narayanan, MD and CFO and Joseph Anantharaju, Executive Vice Chairman and CEO of product Engineering Services on the company’s Q1 performance.
During Q1FY22, the company saw the company a strong pick up in demand across all verticals.
“We have seen a strong uptick in demand, whether it is edutech, retail, hi-tech, media and entertainment, and industrial and manufacturing. If you look at our results, all of them have shown growth on an absolute basis and this is something that we expect will continue for the rest of the year, just given that there was quite a bit of pent up demand, as well as the overall economic conditions are improving, and customers have realised the need to do more of digitization and adopting of digital technologies,” said and Joseph Anantharaju, Executive Vice Chairman and CEO of Product Engineering Services, Happiest Minds Technologies.
The company’s gross margin dropped by 170 basis points in Q1FY22.
“This was expected given the wage hike that we had taken, taken this quarter. And also that is a net addition of about 310 people. So the cost of those employees or happiest minds has also hit our profit & loss,” said Venkatraman Narayanan, MD and CFO of the company.
The company maintained its FY22 margin guidance at 22 to 24 percent.
“We still are holding to the 22 to 24 percent. Yes, last year, we had quite a few unknowns in terms of how long the work from home benefits travel restriction benefits, I am talking of them as benefits from a cost standpoint would sustain. We are seeing that continue through quarter one now and we are likely to see this through Q2 and Q3,” he said.
However, as the vaccination pace picks up and offices start, the company expects these benefits of margin improvement will slowly retract and margin will head towards 22 to 24 percent.
For full management commentary, watch the video.