Happiest Minds Q2 FY27 Results (NSE: HAPPSTMNDS)
Signal: Margin expansion
The read
The operating inflection is strengthening: operating margin expanded 150bps YoY to 18.5% after expansion in Q4FY26 and Q1FY27, making this the third consecutive quarter of improvement, while EBITDA growth of 18.1% exceeded revenue growth of 12.5%. However, reported PAT growth was limited to 15.1% by ₹398 lakh of ITC Infotech merger costs and finance cost growth of 26.2%, and receivable days rose to 101 from 92 QoQ.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹645.43 Cr | 12.5% | 2.7% |
| EBIT | ₹119.11 Cr | 22.4% | |
| Net profit | ₹62.19 Cr | 15.1% | |
| EPS | ₹5.25 | N/A | |
| EBIT margin | 18.5% |
P&L walk
Revenue increased to ₹64,543 lakh, +12.5% YoY and +2.7% QoQ, while operating margin expanded to 18.5% from 17.0% YoY; EBITDA grew 18.1% YoY, but PAT growth was held to 15.1% by ₹398 lakh of merger costs and higher finance cost.
Segments
PDES remains the primary driver at ₹49,484 lakh, or 76.7% of segment revenue, while GBS increased to ₹3,509 lakh and 5.4% of revenue; IMSS contributed ₹11,550 lakh and no segment PBIT is disclosed to identify profit-level divergence.
Key positives
- Revenue increased 12.5% YoY to ₹64,543 lakh, improving from the 10.0% YoY growth reported for Q2FY26 in the prior-results series.
- Operating margin expanded 150bps YoY to 18.5%, the third consecutive quarter of margin expansion after 17.5% in Q1FY27 and 17.5% in Q4FY26.
- EBITDA grew 18.1% YoY to ₹14,204 lakh versus revenue growth of 12.5%, a 5.6pp growth gap; SG&A grew only 3.8% YoY to ₹12,195 lakh, while EBITDA margin expanded 110bps to 21.3%.
- Utilization improved to 81.8% from 80.7% YoY and 80.9% QoQ, while active customers increased to 311 from 290 in Q2FY26.
- GBS revenue increased to ₹3,509 lakh and 5.4% of segment revenue, up from ₹1,594 lakh and 2.7% in Q2FY26.
Key concerns
- Finance cost increased 26.2% YoY to ₹3,086 lakh, materially faster than revenue growth of 12.5%, while interest service coverage declined to 3.84 from 3.99 YoY.
- Trade receivables rose to ₹42,333 lakh and total DSO increased to 101 days from 92 days in Q1FY27, creating a working-capital watchpoint.
- Reported PAT of ₹6,219 lakh grew 15.1% YoY but fell 8.0% QoQ, partly because of ₹398 lakh of merger-related exceptional costs; adjusted PAT was ₹7,911 lakh.
- The company has not yet received Competition Commission of India and NCLT approvals for the proposed merger, and the stated timelines remain subject to statutory and regulatory approvals.
Research and educational content only. Not investment advice.