BENGALURU: Mid-tier IT services company Happiest Minds, which reported a 53% decline in its consolidated net profit for the fourth quarter ended March 2025, expects double-digit growth in FY26, driven by its BFSI and healthcare verticals, and it aims to maintain the same 20-22% of EBITDA and about 16-16.5% to 17.5 or 18% of operating margin.
The company posted a 53% decline in its consolidated net profit for the last quarter at Rs 34 crore as against the year-ago period's Rs 72 crore. Its revenue in the fourth quarter stood at Rs 545 crore, a 30.5% increase compared to Rs 417 crore in the same quarter last year, mainly driven by strong deal closures. In FY25, the company's revenue stood at Rs 2,061 crore compared to Rs 1,625 crore in FY24, a 26.8% growth.
"Operating margin for the fourth quarter was at 14.6% compared to 17.5% in the previous quarter. We have been maintaining at 17+% over the year, but it came to 14.6% because of an unfortunate bad debt of Rs 12.5 crore that we took a hit for this quarter," Venkatraman Narayanan, MD & CFO, told TNIE. Its operating margin was at around 17.3% in FY25.
Narayanan said that Rs 40 crore investments have been made into the business of AI and a new sales team that have been put in place by the company.
Last year, the company acquired US-based Aureus Tech Systems for $8.5 million and PureSoftware Technologies for Rs 779 crore.
"Our acquired companies are actually doing much better than what we had expected," he said.
Joseph Anantharaju, Co-Chairman & CEO told TNIE that they are expecting BFSI and healthcare to drive growth. In Q4FY25, the company's BFSI vertical contributed 26.5% to its total revenues, followed by edutech at 17% and healthcare at 15.6%.
"We've been able to get some good capabilities and good logos with potential from both pure software and Aureus in this BFSI space. And overall, the BFSI segment is seeing quite a few green shoots and increased investments," Anantharaju added.
Talking about macroeconomic uncertainty and US tariff impact, Anantharaju said customers will retool their strategy, the supply chain and everything. “But when you see things changing every day or every week, then, you can't really craft out a strategy and you tend to adopt a wait and watch approach, which is what has happened," he said, adding given some of the developments now, it may not be as big a factor going forward.
The company provided about a 7% average wage hike in FY25 and the CEO said this year also the intent is to go ahead and do an increment cycle. “But what we are going to do is to wait till June to decide on the quantum of the increase,” he said.
Ashok Soota, Chairman & Chief Mentor, said, “The ten strategic transformational changes that we rolled out are shaping Happiest Minds' future. Economists are projecting a slowdown in some of our largest markets; I want to emphasise that we have healthy pipelines of demand and do not see any recession-driven slowdown," he said in a statement.