Happiest Minds sees combined revenue with ITC Infotech crossing $1 billion by FY28

Happiest Minds Technologies and ITC Infotech expect their combined business to cross $1 billion in revenue by the financial year 2027-28 (FY28), arriving at that mark sooner than either company projected on its own, according to Joseph Anantharaju, Co-Chairman and CEO of Happiest Minds Technologies, an AI-first digital engineering and IT services company headquartered in Bengaluru, India.

"Both companies had the goal of getting to a billion dollars, and we're able to do that earlier than what either one of us had set out for ourselves," Anantharaju said.

He said the combination brings together complementary service lines: ITC Infotech's strength in SAP, ERP systems and plant and manufacturing technology, and Happiest Minds' focus on AI, digital engineering, data, cybersecurity and cloud.

He said the two companies see limited overlap among their largest customers, with any overlap confined to smaller accounts. A larger combined entity, he said, would also be positioned to pursue bigger transformation deals and fund continued investment in AI capabilities.

The deal, announced with ITC Infotech agreeing to acquire a 22% stake in Happiest Minds from the promoter group, has raised questions among investors over pricing and structure. Promoters will receive ₹395 per share in cash, while public shareholders will receive ITC Infotech shares through a share swap that values Happiest Minds at ₹405 per share — a gap some market participants see as a modest premium given the scale of the transaction.

Happiest Minds shares were trading at ₹372.95 as of 10:15 am on the NSE. The company has a market capitalisation of ₹5,698.12 crore and its stock has declined more than 34% over the past year.

Venkatraman Narayanan, Managing Director of Happiest Minds, pushed back on the premium concern, pointing to valuation multiples in the deal. "Our earnings before interest, taxes, depreciation, and amortisation (EBITDA) has been given a multiple of 15.1 times, whereas ITC Infotech at 13.6," he said, noting ITC Infotech is 2.17 times larger than Happiest Minds by revenue and holds more cash net of liabilities.

Narayanan said the valuation gap was reviewed by PricewaterhouseCoopers and ICICI Securities, which issued a fairness opinion on the transaction.

On why ITC Infotech is acquiring only 22% of Happiest Minds in cash rather than the full promoter stake, Narayanan said the structure is shaped by listing rules. Post-merger, ITC Infotech will hold close to 74% of the combined company. Listed companies must maintain a minimum public shareholding of around 25%, he said, which is why Happiest Minds will merge into ITC Infotech rather than the reverse.

Narayanan confirmed the deal will not trigger a mandatory open offer for public shareholders despite the change in control. "Not required in the current structure. And the whole structure has been laid out with timelines. There is no open offer in the overall process," he said.

Anantharaju said detailed synergy targets have not been finalised, as the deal is awaiting approval from the Competition Commission of India. He said discussions on integration structure would begin roughly two months after that approval, with both companies working independently toward the 2027-28 revenue goal in the meantime.

Narayanan said the combined entity's operating margin stands at 18.3% on a pro forma basis, built by consolidating 2023-24 (FY24) numbers from both companies. He said Happiest Minds and ITC Infotech will continue operating as independent units and executing their respective plans for the current year until all approvals are secured and the merger takes effect, after which the companies aim to build on the combined base with synergy-driven margin gains, including a targeted 100 basis point expansion.

For the full interview, watch the accompanying video



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