Happiest Minds goes public; subscribed 3 times on day 1

The ~700-crore initial public offering (IPO) of Happiest Minds Technologies was subscribed nearly 3x on Monday, the first day of the issue.

Bulk of the bids came from individual investors, with the retail investor portion seeing a 14.6x subscription. The qualified investor and wealthy investor portions were subscribed 8 per cent and 62 per cent, respectively.

Most of the bids for an IPO typically come on the last day. Yet, this was the highest firstday subscription for an IPO this year. The previous IPO, that of Rossari Biotech, was subscribed 60 per cent on the first day. It went on to get an 85x subscription. Market players said Happiest Minds, too, will see similar oversubscription. The company on Friday allotted shares worth ~316 crore to anchor investors. Part of the reason for the huge retail oversubscription is that only 10 per cent of the shares are reserved for them. Usually, a third of the issue in an IPO is reserved for retail investors — those applying for less than ~200,000 worth of shares.

Happiest Minds is promoted by Ashok Soota, the founding chairman of Mindtree. The firm is into digital IT services, with offerings such as Cloud,

Saas, security, analytics, and IOT. Through the IPO, Happiest Minds is looking to raise ~110 crore in fresh capital. The issue comprises a secondary share sale worth ~590 crore. The price band for the IPO has been set at ~165 to ~166 a share.

At the top end, the firm is valued at ~2,440 crore on a postdilution basis. “At the higher end of the price band, the issue is valued at 29x its FY20 P/E (fully diluted), which is comparable to larger mid-sized IT firms. We like the firm, given its presence in digital services, scalable model with end-to-end capabilities, and the improving financial performance,” said a note by Motilal Oswal.