“SUBSCRIBE” to

Happiest Minds Technologies Ltd.

Presence in high growth IT market
 04th Sept. 2020
Salient features of the IPO: Recommendation SUBSCRIBE
• Bengaluru headquartered IT services firm, Happiest Minds Price Band Rs. 165 - 166 per Share
Technologies Ltd. (HMTL), is planning to raise up to Rs. 7,000mn Face Value Rs. 2
through an IPO, which will open on 07th Sept. and close on 09th Sept.
Shares for Fresh Issue 6.627 - 6.667mn shares
2020. The price band is Rs. 165 - 166 per share.
Shares for OFS 35.664mn shares
• The issue is a combination of fresh (Rs. 1,100mn) and OFS (Rs. 5,884.5
- 5,920.2mn). The company will not receive any proceeds from the Fresh Issue Size Rs. 1,100mn
OFS portion. Of the net proceeds from the fresh issue, Rs. 1,010mn OFS Issue Size Rs. 5,884.5 - 5,920.2mn
will be utilized to meet long term working capital by the company. 42.290 - 42.330mn shares
Total Issue Size
Rest of the amount will be utilized for general corporate purposes. (Rs. 6,984.5 - 7,020.2mn)
Bidding Date 07th Sept. - 09th Sept. 2020
Key competitive strengths: MCAP at Higher Price
Rs. 24,379mn
• Strong brand in digital IT services Band
• Growing high revenue generating customer accounts with a high Enterprise Value at
Rs. 23,710mn
proportion of repeat revenues and revenues from mature markets Higher Price Band
• Scalable business model with multiple drivers of steady growth ICICI Securities Ltd. and
• End to end capabilities spanning the digital lifecycle from roadmap to Book Running Lead
Nomura Financial Advisory &
deployment and maintenance Manager
Securities (India) Pvt. Ltd.
• Strong R&D capability with depth in disruptive technologies creating Registrar KFin Technologies Pvt. Ltd.
value through newly engineered solutions Sector/Industry IT Consulting & Software
• Agile engineering and delivery Promoters Mr. Ashok Soota
Pre and post - issue shareholding pattern
Risk and concerns:
Pre - Issue Post - Issue
• Subdued economic growth and lower demand of the company’s
product Promoter & Promoter
Group 61.77% 53.25%
• Inability to address the changing and evolving customer needs
• Higher reliance on the US market Public 34.16% 42.86%
• Unfavorable movement in forex rates Others 4.07% 3.88%
• Intense competition Total 100.00% 100.00%
• Difficulty in maintaining the profitability Retail application money at higher cut-off price per lot
Number of Shares per Lot 90
Peer comparison and valuation: At the higher price band of Rs. 166 per Application Money Rs. 14,940 per Lot
share, HMTL’s share is valued at a P/E multiple of 29.4x (to its restated Analyst
FY20 EPS of Rs. 5.6), which is at premium to peer average of 25.9x. Rajnath Yadav
Research Analyst (022 - 6707 9999; Ext: 912)
Below are few key observations of the issue: (continued in next page) Email: [email protected]
• Global technological spend is estimated to grow by 6.3% CAGR over 2019-25, from USD 4.2tn in 2019 to USD 6.1tn by 2025.
During this period, legacy IT services are likely to grow by 2.1% CAGR, while digital IT services is estimated to grow by 20.2%
CAGR. Consequently, the global enterprise digital spend, which stood at USD 691bn and represented about 16.4% of the
total technology spend in 2019 is forecasted to be at USD 2,083bn and is projected to be around 34.3% of the total
technology spend in 2025. (Source: RHP)
• Digital services are those that enable organizations to leverage the new-age services that have flooded the technology
market. The combination of software and hardware services that enable the delivery of information using the internet
typically comes under the purview of digital service. With organizations looking to capitalize on the benefits of digitization;
going forward, the growth in digital services will outpace the growth in the legacy services.
• HMTL’s target market includes business services, IT services, infrastructure-as-a-service, applications, application
development and deployment. In FY20 and Q1 FY21, the company derived 96.9% and 96.3% of its revenue from digital IT
services. Going forward as mentioned earlier, the growth in digital services will outpace the growth in the legacy services,
the company is better placed to benefit from the expansion in the sector.
• Since inception, it has focused on software product development (which includes design & prototyping, product
development & testing, component design & integration, product deployment, performance tuning, porting, cross-platform
migration and ongoing support); and partnered with various global independent software vendors and technology
companies thereby enabling it to provide services to multiple industries like Edutech, HiTech, Industrial/Manufacturing,
BFSI, Retail etc. In FY20, Edutech, HiTech, BFSI and Travel, Media & Entertainment industries contributed 21.3%, 21%,
17.5% and 17.1% to the revenue, respectively. During pandemic lockdown, around 75% of the company’s businesses were
running smoothly or marginally impacted. Moreover, it has limited exposure to travel & hospitality industry.
• Over FY18-20, the company derived majority of the revenue from USA (around 75.5%). This is followed by India (around
11.8%) and UK (around 9.4) markets. Currently, it is focusing on growing the business from the European markets.

1
 Peer comparison and valuation (Contd…):

Face Stock return (%) Operating PAT

CMP MCAP EV EBITDA PAT EBITDA
Company name value revenue margin
(Rs.) (Rs. mn) (Rs. mn) (Rs. mn) (Rs. mn) margin (%)
(Rs.) (Rs. mn) (%)
1W 1M 3M 1Y
Happiest Minds
2 166 24,379 22,795 6,982 971 830 13.9% 11.9%
Technologies Ltd.
Tata Consultancy Services
1 2,300 8,628,796 8,270,736 2.1% 12.4% 12.8% 2.1% 1,569,490 421,090 323,400 26.8% 20.6%
Ltd.
Infosys Ltd. 5 935 3,984,013 3,750,973 -2.3% 33.4% 25.3% 14.9% 907,910 217,560 165,940 24.0% 18.3%
Larsen & Toubro Infotech
1 2,489 433,497 406,059 -0.1% 34.6% 26.9% 54.6% 108,786 20,204 15,201 18.6% 14.0%
Ltd.
Mindtree Ltd. 10 1,208 198,838 184,950 7.2% 33.0% 22.0% 76.6% 77,643 10,815 6,309 13.9% 8.1%
HCL Technologies Ltd. 2 709 1,923,582 1,822,662 0.4% 25.9% 25.4% 27.9% 604,270 139,260 101,200 23.0% 16.7%
Average 21.3% 15.5%
Debt Total Asset
EPS BVPS DPS RoE RoCE P/E P / B EV / Sales EV / EBITDA MCAP / Earning
Company Name Equity Turnover
(Rs.) (Rs.) (Rs.) (%) (%) (x) (x) (x) (x) Sales (x) Yield (%)
Ratio Ratio
Happiest Minds
5.6 25.6 0.0 0.2 1.1 22.1% 18.5% 29.4 6.5 3.3 23.5 3.5 3.4%
Technologies Ltd.
Tata Consultancy Services
86.2 225.9 3.5 0.0 1.3 38.2% 42.4% 26.7 10.2 5.3 19.6 5.5 3.7%
Ltd.
Infosys Ltd. 39.0 154.6 5.5 0.0 1.0 25.2% 26.9% 24.0 6.1 4.1 17.2 4.4 4.2%
Larsen & Toubro Infotech
87.3 310.3 27.5 0.0 1.3 28.1% 27.9% 28.5 8.0 3.7 20.1 4.0 3.5%
Ltd.
Mindtree Ltd. 38.3 191.8 14.0 0.0 1.6 20.0% 22.1% 31.5 6.3 2.4 17.1 2.6 3.2%
HCL Technologies Ltd. 37.3 152.8 7.0 0.0 1.1 24.4% 27.0% 19.0 4.6 3.0 13.1 3.2 5.3%
Average 11.5 0.0 1.2 27.2% 29.3% 25.9 7.0 3.7 17.4 3.9 4.0%
Note: All financial data are of FY20; Source: Choice Broking Research

• Over the years, HMTL has served more than 350 customers globally. As of 30th Jun. 2020, it had 148 active customers.
Moreover, a substantial portion of its revenues is generated from repeat business, which indicates a high degree of
customer stickiness. Over FY18-20, repeat customers contributed around 90% of the revenue and these repeat customers
include more than 35 Fortune 2000/Forbes 200 corporations.
• HMTL has reported a short financial history, but the performance seems to be improving. On the back of higher volume of
projects executed over FY18-20, HMTL reported a 22.8% CAGR rise in consolidated revenue to Rs. 6,982.1mn in FY20.
Higher utilization of work forces led to an EBITDA profit of Rs. 548.3mn and Rs. 971mn in FY19 and FY20, respectively, as
compared to an EBITDA loss of Rs. 186.1mn in FY18. EBITDA margin during FY19 and FY20 stood at 9.3% and 13.9%. In Q1
FY21, EBITDA margin further improved to 21.4%. Adjusted PAT stood at a loss of Rs. 224.7mn in FY18, while it remained in
green and stood at Rs. 267.9mn in FY19 and Rs. 829.7mn in FY20. PAT margin expanded from 4.5% in FY19 to 11.9% in
FY20 and further to 28.3% in Q1 FY21. The company had a positive operating cash flow over FY18-20, which increased by
229.4% CAGR to Rs. 1,122.2mn in FY20. Average operating cash flow during the period was at around Rs. 600.6mn. We feel
that HMTL has gained business momentum and thus is forecasted to report improved operating and financial performance
in the mid-term.
• Based on our quick estimate, we are estimating a 14.6% CAGR rise in top-line over FY20-23 to Rs. 10,516mn in FY23.
EBITDA and PAT are anticipated to grow by 22.1% and 17.9%, respectively. EBITDA and PAT margins are likely to expand by
290bps and 104bps, respectively. RoE is expected to improve to 19.7% in FY23 from 18.5% in FY20.
• Through this IPO, the promoter is partially selling its stake, while a private equity investor CMDB II is fully exiting its 19.43%
stake from the company. Post issue, promoter stake will decline to 53.25% as compared to pre-ipo stake of 61.77%. Public
stake will increase to 42.86%.
• At the higher price band, the issue seems to be fully priced as compared to its domestic peers. HMTL earned an average
97.1% of the revenue from digital IT services as compared to its domestic peers, which earned in the range of 30-50%. Thus
the company cannot be fully comparable to the domestic peers.
• There are international peers, who derive almost all of their revenue from digital services are trading at a P/E multiple
ranging from 67-139x. Assuming the valuations of these companies in the US markets to be frothy, the valuation
demanded by HMTL seems to be attractive.

Thus based on the above observations, we assign a “SUBSCRIBE” rating for the issue.

© CHOICE INSTITUTIONAL RESEARCH

About the issue:

• HMTL is coming up with an initial public offering (IPO) with 42.290 - 42.330mn shares (fresh issue: 6.627 - 6.667mn
shares; OFS shares: 35.664mn shares) in offering. The offer represents around 28.8% of its post issue paid-up equity
shares of the company. Total IPO size is Rs. 6,984.5 - 7,020.2mn.

• The issue will open on 07th Sept. 2020 and close on 09th Sept. 2020.

• The issue is through book building process with a price band of Rs. 165 - 166 per share.

• Since the issue is a combination of fresh and OFS, the company will not receive any proceeds from the OFS portion. Of
the net proceeds from the fresh issue, Rs. 1,010mn will be utilized to meet long term working capital by the company.
Rest of the amount will be utilized for general corporate purposes.

• 75% of the net issue shall be allocated on a proportionate basis to qualified institutional buyers, while rest 15% and 10%
is reserved for non-institutional bidders and retail investors, respectively.

• Promoter holds 61.77% stake in the company and post-IPO this will come down to 53.25%. Public holding will increase
from current 34.16% to 42.86%.

Pre and post issue shareholding pattern (%)

Pre Issue Post Issue (at higher price band)
Promoter & Promoter Group 61.77% 53.25%
Public 34.16% 42.86%
Others 4.07% 3.88%
Source: Choice Equity Broking

Indicative IPO process time line:

Unblocking of
Offer Closes on
ASBA Account
09-Sept-2020
15-Sept-2020

Offer Opens on Finalization of Commencement

07-Sept-2020 Basis of Credit to Demat of Trading
Allotment Accounts 17-Sept-2020
14-Sept-2020 15-Sept-2020
Company introduction:

Positioned as “Born Digital. Born Agile”, HMTL focuses on delivering a seamless digital experience to its customers. Its
offerings include, among others, digital business, product engineering, infrastructure management and security services. The
company is capable to provide end-to-end solution in the digital space.

HMTL helps its customers in finding new ways to interact with their users and clients enabling them to become more
engaging, responsive and efficient. It also offer solutions across the spectrum of various digital technologies such as Robotic
Process Automation, Software-Defined Networking/Network Function Virtualization, Big Data and Advanced Analytics,
Internet of Things (IoT), Cloud, Business Process Management and security.

According to Frost & Sullivan Report, global digital services market of USD 691bn in 2019 is estimated to grow at a 20.2%
CAGR to USD 2,083bn by 2025. In FY20, the company derived 96.9% of its revenues from digital services, which is one of the
highest among Indian IT companies. The Frost & Sullivan Report further notes that the legacy IT market as a percentage of
total technology spend is estimated to decline from 85.7% share in 2019 to 65% share by 2025, with digital spend making up
the remaining 35% share by then.

As of 30th Jun. 2020, HMTL had 148 active customers. During FY20 and Q1 FY21, it delivered 87.9% and 90.1% of its project
through agile delivery methodology. Over the years and currently during the ongoing outbreak of Covid19, the company
have successfully implemented its business continuity plans including to achieve efficient work-from-home practices to
ensure connectivity across the enterprise.

HMTL’s business is divided into the following three business units:

• Digital business services (DBS): Its DBS offerings are aimed at (i) driving digital modernization & transformation for its
customers through digital application development & application modernization for an improved customer experience,
enhanced productivity and better business outcomes; (ii) implementation of solutions, development & implementation
of solution, capabilities for improving data quality of the customer’s platform, assistance in designing, testing of
operations and management of platform and modernization of digital practices; and (iii) consulting and domain led
offerings such as digital roadmap, mindful design thinking, and migration of on-premise applications to cloud.
• Product engineering services (PES): PES business unit aims to help the customers capitalize on the transformative
potential of ‘digital’ by building products and platforms that are smart, secure and connected. HMTL provides customers
a blend of hardware and embedded software knowledge which combines with its software platform engineering skills to
help create high quality, scalable and secure solutions. The company’s offerings extend across the development lifecycle
from strategy to final roll out while ensuring quality. It gets its clients started on this journey with the digital foundry that
allows it to build rapid prototypes for customers and provide a scalable minimum viable product. The company embraces
a cloud and a mobile friendly approach along with an agile model that is supported by test automation to help its clients
accelerate their time to market and build a competitive advantage.
• Infrastructure management & security services (IMSS): IMSS offerings provide an end to end monitoring and
management capability with secure ring fencing of the customer’s applications and infrastructure. HMTL provides
continuous support and managed security services for mid-sized enterprises and technology companies. Specialized in
automation of business and IT operations with DevSecOps model and with NOC/SOC, the company strives to ensure that
the data center, cloud infrastructure and applications are safe, secure, efficient and productive. Its security offerings
include cyber and infrastructure security, governance, risk & compliance, data privacy and security, identity and access
management and threat and vulnerability management. Infrastructure offerings include DC and hybrid cloud services,
workspace services, service automation (RPA, ITSM & ITOM), database and middleware services and software defined
infrastructure services.
Company introduction (Contd…):

HMTL’s business units are supported by the following three centers of excellence:

• IoT: The company’s IoT offering includes consulting led digital strategy creation, device/edge/platform engineering, end-
to-end system integration on industry standard IoT platforms, IoT security, and IoT enabled managed services,
implementing IoT roadmap, deriving insights from connecting assets, connecting manufacturing, supply chain, products
and services to deliver IoT led business transformation and new business models aimed at enhancing customer’s
operations and customer experience. In FY19, FY20 and Q1 FY21, revenues from IoT offerings were 8.4%, 9.8% and 9.3%,
respectively.
• Analytics/Artificial Intelligence (AI): HMTL’s analytics/AI offering includes implementation of advanced analytics using
artificial intelligence, machine learning and statistical models, engineering big data platforms to deal with large volume of
data, creating actionable insights with data warehousing, modernization of data infrastructure and process automation
through AI. In FY19, FY20 and Q1 FY21, revenues from analytics/AI were 9.1%, 11.6% and 12.1%, respectively.
• Digital Process Automation (DPA): The company’s DPA offering includes consulting led digital transformation through
process automation of core business applications, products and infrastructure landscape of its customers, leveraging
various intelligent process automation tools and technologies including RPA, intelligent business process management
(iBPMS) and cognitive automation using AI & machine learning based models. In FY20 and Q1 FY21, revenue from DPA
was 20.7% and 24.1%, respectively.

Competition: HMTL is an experienced global IT services provider focused on complex software product development
services and software engineering. It competes with a variety of software product development and IT companies, as well as
service providers. The company believes that the key competitive factors in the industry include changing technologies,
customer preferences and needs & the ability to rapidly deliver solutions supporting such evolving needs. Other competitive
factors include breadth and depth of service offerings, domain expertise, reputation and track record and the ability to tailor
service offerings to specific customer needs.

HMTL face strong competition from onshore and offshore IT services companies. Global competitors such as Globant, EPAM
and Endava derive all their revenues from digital services. Among Indian IT firms, HMTL’s digital IT revenues as a proportion
of overall revenues was 96.9% in FY20. Other Indian IT firms like Infosys, Wipro, TCS and Tech Mahindra, are also diversifying
and showcasing their digital service offerings.
 Company introduction (Contd…):

Financial performance: HMTL has reported a short financial history, but the performance seems to be improving. On the
back of higher volume of projects executed over FY18-20, HMTL reported a 22.8% CAGR rise in consolidated revenue to Rs.
6,982.1mn in FY20. Business from PES (which contributed an average of 47.8% to the total revenue) increased by 29.6%
CAGR, while business from IMSS and DBS (which contributed an average of 21.7% and 30.5%, respectively, to the total
revenue) grew by 24.8% and 11.6% CAGR over the period. In Q1 FY21, top-line stood at Rs. 1,770.2mn.

Over FY18-20, employee cost increased by 11.2% CAGR and stood at 63.2% of the top-line in FY20 as compared to 77.1% in
FY18, this was primarily due to higher utilization of work forces. Other expenses increased by 13.3% CAGR. Consequently,
total operating expenses increased by 11.7% CAGR over FY18-20 (lower than top-line growth). Consolidated EBITDA stood at
a profit of Rs. 971 in FY20 (with a margin of 13.9%) as compared to a FY18 EBITDA loss of Rs. 186.1mn. In FY19, EBITDA stood
at a profit of Rs. 548.3mn with a margin of 9.3%. In Q1 FY21, EBITDA stood at Rs. 378.5mn with a margin of 21.4%.

Depreciation charge remained almost flat over FY18-20, while finance cost declined by 10.2% CAGR (mainly due to 6.8%
CAGR fall in debt levels). Other income declined by 21.8%. The company reported an exceptional loss of Rs. 125.8mn in FY19
and Rs. 112.6mn in FY20, mainly arising from the impairment of goodwill. As a result, adjusted PAT stood at a loss Rs.
224.7mn in FY18, while it remained in green and stood at Rs. 267.9mn in FY19 and Rs. 829.7mn in FY20. PAT margin
expanded from 4.5% in FY19 to 11.9% in FY20. Q1 FY21 adjusted PAT stood at Rs. 501.8mn with a margin of 28.3%.

The company had a positive operating cash flow over FY18-20, which increased by 229.4% CAGR to Rs. 1,122.2mn in FY20.
Average operating cash flow during the period was at around Rs. 600.6mn.

Consolidated financial snapshot (Rs. mn) FY18 FY19 FY20 Q1 FY21 CAGR (%) Y-o-Y (%)
Sale of service & licenses from IMSS 986.2 1,294.3 1,536.1 364.1 24.8% 18.7%
Sale of service & licenses from DBS 1,540.3 1,809.0 1,916.7 459.8 11.6% 6.0%
Sale of service & licenses from PES 2,102.4 2,800.3 3,529.3 946.3 29.6% 26.0%
Revenue from operations 4,628.9 5,903.6 6,982.1 1,770.2 22.8% 18.3%
EBITDA (186.1) 548.3 971.0 378.5 77.1%
Adjusted PAT (224.7) 267.9 829.7 501.8 209.7%

Restated adjusted EPS (1.5) 1.8 5.6 3.4 209.7%

Cash flow from operating activities 103.4 576.2 1,122.2 333.4 229.4% 94.8%
NOPLAT (393.6) 300.5 750.7 259.1 149.8%
FCF 9.8 (2,373.4)
RoIC (%) 26.9% 7.9%

Revenue growth rate (%) 27.5% 18.3% (0.0927)

EBITDA growth rate (%) -394.6% 77.1% 4.7172
EBITDA margin (%) -4.0% 9.3% 13.9% 21.4% 0.1793 0.0462
EBIT growth rate (%) -176.3% 155.8% 3.3215
EBIT margin (%) -8.5% 5.1% 11.0% 18.5% 0.1951 0.0592
Restated adjusted PAT growth rate (%) -219.2% 209.7% 4.2893
Restated adjusted PAT margin (%) -4.9% 4.5% 11.9% 28.3% 0.1674 0.0735

Fixed asset turnover ratio (x) 4.9 9.6 18.4 4.6 94.4% 90.8%
Total asset turnover ratio (x) 1.2 1.4 1.4 0.3 7.2% -3.8%
Net debt (Rs.) (649.1) (485.1) (484.7) (759.5) -13.6% -0.1%
Debt to equity (x) (0.8) (1.1) 0.3 0.3 -125.7%
Net debt to EBITDA (x) 3.5 (0.9) (0.5) (2.0) -43.6%

RoE (%) 27.0% 15.7%

Adjusted RoE (%) 31.3% 15.7%
RoA (%) -5.8% 6.5% 16.3% 8.8% 0.2213 0.0985
RoCE (%) 25.2% 9.1%
Source: Choice Equity Broking
 Competitive strengths:
• Strong brand in digital IT services
• Growing high revenue generating customer accounts with a high proportion
of repeat revenues and revenues from mature markets
• Scalable business model with multiple drivers of steady growth
• End to end capabilities spanning the digital lifecycle from roadmap to
deployment and maintenance
• Strong R&D capability with depth in disruptive technologies creating value
through newly engineered solutions
• Agile engineering and delivery

Business strategy:
• Acquire new accounts and deepen key account relationships
• Further investments in centers of excellence and digital processes
• Strengthen existing partnerships and enter into new partnerships with
independent software vendors
• Domain led approach towards customer acquisition and revenue
generation in specific verticals
• Attract, develop and retain skilled employees to sustain service quality and
customer experience
• Selectively pursue strategic acquisitions

Risk and concerns:

• Subdued economic growth and lower demand of the company’s
product
• Inability to address the changing and evolving customer needs
• Higher reliance on the US market
• Unfavorable movement in forex rates
• Intense competition
• Difficulty in maintaining the profitability

© CHOICE INSTITUTIONAL RESEARCH

 Financial statements:

Consolidated profit and loss statement (Rs. mn)

Annual
CAGR over
FY18 FY19 FY20 Q1 FY21 Growth over
FY18 - 20 (%)
FY19 (%)
Revenue from operations 4,628.9 5,903.6 6,982.1 1,770.2 22.8% 18.3%
Employee benefits expense (3,568.7) (3,850.5) (4,412.3) (1,082.8) 11.2% 14.6%
Other expenses (1,246.3) (1,504.8) (1,598.8) (308.9) 13.3% 6.2%
EBITDA (186.1) 548.3 971.0 378.5 77.1%
Depreciation and amortization expense (207.5) (247.8) (202.3) (51.2) -1.3% -18.4%
EBIT (393.6) 300.5 768.7 327.3 155.8%
Finance costs (99.5) (159.4) (80.2) (18.6) -10.2% -49.7%
Other income 262.3 114.5 160.2 99.7 -21.8% 39.9%
Exceptional items (125.8) (112.6) -10.5%
PBT (230.8) 129.8 736.1 408.4 467.1%
Tax expenses 6.1 12.3 (19.0) 93.4 -254.5%
Reported PAT (224.7) 142.1 717.1 501.8 404.6%
Adjusted PAT (224.7) 267.9 829.7 501.8 209.7%

Consolidated balance sheet statement (Rs. mn)

Annual
CAGR over
FY18 FY19 FY20 Q1 FY21 Growth over
FY18 - 20 (%)
FY19 (%)
Equity share Capital 37.5 59.7 87.9 204.4 53.1% 47.2%
Other equity (1,126.3) (720.2) 2,565.2 2,985.7
Long term borrowings 216.8 157.9 92.7 73.0 -34.6% -41.3%
Long term lease liabilities 431.4 296.4 173.1 167.4 -36.7% -41.6%
Long term provisions 81.2 94.0 125.5 150.8 24.3% 33.5%
Long term deferred tax liability 12.3
Short term borrowings 685.5 601.2 691.6 908.9
Current lease liabilities 145.6 158.2 181.6 191.9 11.7% 14.8%
Other current financial liabilities 2,932.3 2,920.1 560.2 359.1 -56.3% -80.8%
Current contract liability 54.7 106.7 81.8 57.8 22.3% -23.3%
Trade payables 249.8 287.8 344.2 360.0 17.4% 19.6%
Short term provisions 82.0 99.8 124.6 146.6 23.3% 24.8%
Other current liabilities 67.1 73.6 53.1 125.2 -11.0% -27.9%
Total liabilities 3,869.9 4,135.2 5,081.5 5,730.8 14.6% 22.9%

Property, plant and equipment 26.4 21.4 9.3 7.7 -40.6% -56.5%
Other intangible assets 79.3 19.6 7.2 6.1 -69.9% -63.3%
Capital work-in-progress 1.4
Intangibles assets under development 1.7 1.7 1.7 0.0%
Goodwill 296.1 173.6 61.0 61.0 -54.6% -64.9%
Right of use assets 548.4 396.5 300.6 306.3 -26.0% -24.2%
Long term loans 58.5 61.8 76.7 54.4 14.5% 24.1%
Other long term financial assets 18.5 23.9 36.8 27.8 41.0% 54.0%
Long term net income tax assets 58.4 92.0 133.5 38.2 51.2% 45.1%
Long term net deferred tax assets 188.6
Other long term assets 4.0 4.8 3.3 3.5 -9.2% -31.3%
Current investments 1,386.2 981.5 833.7 1,062.1 -22.4% -15.1%
Cash and cash equivalents 165.2 262.7 435.3 679.3 62.3% 65.7%
Other current financial assets 114.1 709.1 1,917.7 2,148.1 310.0% 170.4%
Trade receivables 943.7 1,292.7 1,148.7 985.1 10.3% -11.1%
Current loans 27.3 7.7 10.0 30.1 -39.5% 29.9%
Other current assets 142.4 86.2 106.0 130.8 -13.7% 23.0%
Total assets 3,869.9 4,135.2 5,081.5 5,730.8 14.6% 22.9%
Source: Choice Equity Broking

© CHOICE INSTITUTIONAL RESEARCH

 Financial statements:

Consolidated cash flow statement (Rs. mn)

CAGR over Annual Growth
Particulars (Rs. mn) FY18 FY19 FY20 Q1 FY21
FY18 - 20 (%) over FY19 (%)
Cash Flow Before Working Capital Changes 3.2 769.2 1,112.5 455.2 1764.6% 44.6%
Change in Working Capital 98.2 (159.4) 70.2 (132.0) -15.5%
Cash Flow from Operating Activities 103.4 576.2 1,122.2 333.4 229.4% 94.8%
Purchase of Property , Plant & Equipment (11.3) (7.9) (4.6) (1.0)
Cash Flow from Investing Activities (268.5) (2.7) (737.4) (219.6)
Cash Flow from Financing Activities 263.2 (588.4) (133.4) (21.9)

Net Cash Flow 98.1 (14.9) 251.4 91.9 60.1%

Opening Balance of Cash and Bank Balances 67.0 177.6 183.9 437.5 65.7% 3.5%
Closing Balance of Cash and Bank Balances 165.1 162.7 435.3 529.4 62.4% 167.5%

Consolidated financial ratios

Particulars (Rs. mn) FY18 FY19 FY20 Q1 FY21
Revenue Growth Rate (%) 27.5% 18.3%
EBITDA Growth Rate (%) -394.6% 77.1%
EBITDA Margin (%) -4.0% 9.3% 13.9% 21.4%
EBIT Growth Rate (%) -176.3% 155.8%
EBIT Margin (%) -8.5% 5.1% 11.0% 18.5%
Adjusted PAT Growth Rate (%) -219.2% 209.7%
Adjusted PAT Margin (%) -4.9% 4.5% 11.9% 28.3%
Liquidity ratios
Current Ratio 0.7 0.8 2.2 2.3
Debt Equity Ratio (0.8) (1.1) 0.3 0.3
Net Debt to EBITDA 3.5 (0.9) (0.5) (2.0)
Turnover ratios
Inventories Days
Debtor Days 74.4 69.1 63.8
Payable Days (19.7) (16.6) (16.5)
Cash Conversion Cycle 54.7 52.5 47.3
Fixed Asset Turnover Ratio (x) 4.9 9.6 18.4
Total Asset Turnover Ratio (x) 1.2 1.4 1.4
Return ratios
Adjusted RoE (%) 31.3%
RoA (%) -5.8% 6.5% 16.3%
RoCE (%) 25.2%
Per share data
Restated Reported EPS (Rs.) (1.5) 1.8 5.6 3.4
Restated DPS (Rs.)
Restated BVPS (Rs.) (7.4) (4.5) 18.1 21.7
Restated Operating Cash Flow Per Share (Rs.) 0.7 3.9 7.6 2.3
Restated Free Cash Flow Per Share (Rs.) 0.1 (16.2)
Dividend Payout Ratio 0.0% 0.0% 0.0% 0.0%
Note: Ratios calculated on pre-issue data; Source: Company RHP

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