Happiest Minds Technologies Ltd (HAPPSTMNDS) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: I now hand the conference over to Miss Aditi Patil from ICICI Securities. Thank you and over to you Miss Patil.
Aditi Patil (ICICI Securities): Good morning ladies and gentlemen, thank you for joining us today on the Q2 FY2
Aditi Patil (ICICI Securities): Earnings Call of Happiest Minds Technologies Limited. On behalf of ICICI Securities, I would like to thank the management of Happiest Minds for giving us the opportunity to host this call. Today, we have with us Mr. Joseph Anantharaju, Co-Chairman and CEO, Mr. Venkatraman Narayanan, Managing Director, Mr. Mohan Ram Mohan, CEO, Infrastructure Management and Security Services, Mr. Sridhar Mantha, CEO, Generative AI Business Services, Mr. Praveen Darshankar, Company Secretary and Compliance Officer, Mr. Anand Balakrishnan, CFO, Ms. Priyanka Sharma, Head, Investor Relations. I will now hand it over to Priyanka Sharma for the safe harbor statement and to take the proceedings forward. Thank you, over to you, Priyanka.
Priyanka Sharma (Happiest Minds Technologies Ltd): Thank you so much, Aditi. Good morning to all the participants on the call, and welcome to the conference call to discuss the financial results for the second quarter and half year ended September 2026. I am Sharma, Head of Investor Relations. We hope you have all had the opportunity to review the press release issued yesterday. Now, let me briefly walk you through the agenda for today's call. Joseph will begin by sharing his perspectives on the business environment, our strategic priorities, and overall business performance. Sridhar will then touch upon AI-led transformation initiatives and progress around AI-led engagements and capabilities. Thereafter, Venkat will take you through the financial and operational performance for the quarter and, followed by outlook for 2020 '27. Following the management commentary, we will open the floor for questions. Before we begin, let me read the safe harbor statements. During this call, we may make forward-looking statements. These statements reflect the environment we see as of today and involve risk and uncertainties that might cause our actual results to differ materially. We do not undertake any obligations to update these statements periodically. With that, let me now hand it over to Joseph. Joseph, over to you.
Joseph Anantharaju (Happiest Minds Technologies Ltd): Thanks, Priyanka. Good morning, everyone, and thank you for joining us to discuss Happiest Minds Technologies financial results for the second quarter and first half of FY '27. We delivered another quarter of healthy growth and improved operating performance. Revenue stood at 645 crores rupees, growing 12.5% year-on-year in rupee terms. Operating profit grew 22.5% year-on-year with margins improving to 18.5%. This performance reflects the resilience of our business, the strength of our customer relationships, and our continued focus on profitable growth in a selective demand environment. Venkat will get into more details on our financial and operation performance. Q2 also has been an important quarter in our strategic journey, as mentioned earlier, following the announcement of a proposed combination with ITC Infotech on August 31st. We believe this combination presents a significant opportunity to create a scaled AI-first global technology services enterprise by bringing together highly complementary capabilities. Happiest Minds strengths in AI, digital engineering, data, cloud, cybersecurity, and product engineering complement ITC Infotech's expertise in enterprise transformation, SAP, PLM, Industry 4.4, and industry-specific solutions. Upon completion, the combined enterprise is expected to be better positioned to pursue larger transformation opportunities, deepen customer relationships, and compete more effectively across global markets with an aspiration to achieve US $1 billion in annual revenue by FY '28. The proposed combination is progressing through the necessary approval processes. In the meantime, both organizations continue to operate independently with an unwavering focus on customers, delivery, and business execution. Let me now turn to the demand environment. Enterprise technology spending remains selective with clients prioritizing investments that deliver clear and measurable business outcomes.
Joseph Anantharaju (Happiest Minds Technologies Ltd): especially in the near to medium term. We continue to see more opportunities across AI, modernization, data, and cybersecurity with they're increasingly moving from experimentation towards enterprise scale adoption. For Happiest Minds, this creates a significant opportunity at the intersection of AI and digital engineering. Customers are looking to improve engineering productivity while modernizing legacy technology estates and addressing technical debt. These shifts are also fundamentally changing the economics of technology delivery and shaping how we think about our own business model. As part of our AI First, Agile Always strategy, we have initiated Project Re-Imagine, an important strategic program focused on transforming how we skill and hire our people, execute on customer projects, and capture customer value in an AI native world. At its core, Project Re-Imagine is about moving beyond traditional project delivery towards custom customer value engineering, where AI becomes not just a productivity tool, but a value multiplier. It represents a shift from predominantly effort-based delivery towards more outcome-driven engagements with greater emphasis on the business and technology value we create for our customers. We believe this evolution is critical to our future growth. As AI reshapes technology delivery, our opportunity is not simply to improve productivity to, but to build a more differentiated, scalable, and value-oriented business that strengthens customer relationships and positions us for sustained growth. We're also making encouraging progress in translating our AI capabilities into customer adoption and commercial opportunities. An important enabler of this transformation is Reliably, our AI-powered software engineering platform designed to embed and ease the adoption of agentic AI across the software d- development life cycle, and by, by enhancing engineering productivity and accelerating modernization. We are seeing encouraging traction with around 15 existing customers adopting Reliably across our engineering use cases. Beyond software engineering, we are extending our AI capabilities into repeatable, industry-focused solutions. EduV, our AI solution targeted at universities, is generating encouraging interest across Southeast Asia, the Middle East, and India as educational institutions explore AI-led transformation. We are developing a growing pipeline across multiple institutions with opportunity spanning academic, administrative, and student-facing processes. Together with solutions such as Artha and Insurance-in-a-Box, these, these investments in platforms, reusable solutions, and intellectual property are intended to strengthen our differentiation and enable more strategic, longer-term customer relationships. Sridhar will share further perspectives on our AI progress and how these capabilities are translating into customer and delivery outcomes. Alongside our investments in AI and engineering capabilities, we are also seeing encouraging mo- momentum in our focused go-to-market initiatives. In the GCC space, enterprises are increasingly looking beyond traditional delivery-centric models and view GCCs as hubs for technology transformation, innovation, and AI adoption. We have strengthened our AI-first GCC-as-a-Service proposition across setup, scale up, and transformation. During the quarter, we secured a multimillion-dollar BOTAT, which is Build, Operate, Transform, Agentify, and Transfer, engagement with a global digital asset management company. Our private equity ecosystem initiative provides another strategic avenue to engage PE firms and their portfolio companies, supporting their technology modernization, operational transformation, and value creation priorities. Together, our GCC and PE PE initiatives represent important growth avenues, enabling us to engage customers earlier in their transformation journeys and progressively expand relationships across AI, engineering, and enterprise technology services. Turning to our customer franchise, we continue to strengthen our relationships. During the quarter, we ended Q2 with 311 active customers and now serve 95 billion-dollar corporations, up from 92 in Q1.
Joseph Anantharaju (Happiest Minds Technologies Ltd): engineering intensive and longer term relationships. I've already spoken about our significant GCC win. Let me briefly highlight a few other notable engagements during the quarter. A leading Indian commercial vehicle manufacturer selected us to support its next generation connected vehicle platform and software defined vehicle journey. With a global electronics distributor, we secured a cloud engineering engagement covering Azure administration, infrastructure automation, networking, and observability. And for a US skincare, beauty, and personal care manufacturer, we secured a multi-year IT IT-managed services engagement. These wins reflect the breadth of our capabilities and our ability to address increasingly strategic technology and transformation priorities for customers. From an industry perspective, BFSI remained our largest vertical, contributing approximately 28% of revenues. We also saw encouraging sequential momentum in Retail and CPG, High-Tech, and Industrial, while Healthcare and EdTech continued to be an important part of our portfolio. Geographically, the Americas remained our largest market, contributing approximately 56% of revenues. APAC delivered healthy sequential growth of approximately 10%, increasing its contribution to 9%, while India contributed 18%. Cybersecurity remains another important area of opportunity as enterprise technology environments become increasingly cloud, data, and AI-driven. We continue to secure managed engagements across threat intelligence, security operations, vulnerability management, identity and access management, and managed security services. We are also strengthening our AI-led cybersecurity capabilities through SecAI-Genie and our AI governance offerings, complemented by a collaboration with EC-Council. As AI adoption scales, we believe security, governance, and resilience will become increasingly integral to enterprise transformation, creating further opportunities for our cybersecurity practice. Looking ahead, while the macro environment environment remains mixed, we remain encouraged by the structural growth opportunities across AI, digital engineering, modernization, cloud, and cybersecurity. Our focus is on driving measurable customer value and profitable growth by strengthening our capabilities, evolving our delivery model through project Reimagine, and scaling differentiated AI-led solutions and go-to-market initiatives. Together with the opportunities presented by a proposed combination with ITC Infotech, we believe these initiatives position us to build a more competitive, scalable, and future-ready enterprise, creating sustainable long-term value for our customers, people, and shareholders. With that, I'll hand over to Sridhar to elaborate on how we are translating our AI-first strategy into execution and tangible customer outcomes. Sridhar, over to you.
Sridhar Mantha (Happiest Minds Technologies Ltd): Thank you, Joseph, and good morning, everyone. Joseph has spoken about the growing importance of AI in enterprise transformation and how we are positioning Happiest Minds to capture that opportunity. I'll focus on how we are translating the strategy into engineering capabilities, reusable platforms, and tangible customer outcomes. Our AI journey continues to be centered around three priorities: making AI native to solution design, embedding AI across engineering and delivery, and building the platforms, skills, and governance necessary to scale enterprise AI adoption. Let me start with the solution design. The multi-million-dollar BOTAD deal Joseph talked about has interesting AI productivity elements as key outcomes that helped us secure the deal. We committed a certain AI productivity percentage as part of transformation by agentifying the entire SDLC process by FY '28. Fine-tuning the SLMs Joseph talked about helps us to gain higher AI productivity than using agents with foundation models. This allowed us to make more aggressive bids than competition on fixed-bid deals. In Q2, we secured a deal with an Indian steel manufacturing company to build a unified digital planning and execution platform that could transform the entire production planning from reactive process into a structured, transparent, and AI-enabled. AI is also allowing us to solve the kind of problems that were not possible in the past. We delivered an end-to-end test automation for a warehousing platform. There is no product document
Sridhar Mantha (Happiest Minds Technologies Ltd): or details of the manual test cases were available. In the past, doing such projects would have been near impossible, or would have taken extremely long time. However, with the help of AI, we were able to successfully create a complete set of automation test cases. Joseph talked also about various industry specific AI solutions like Eduview, Insurance in a Box, etc. Our Enterprise AI Platform provides collection of modular, secure and model agnostic solutions that enable customers to move beyond isolated UI case use cases towards broader enterprise implementations. The objective is to give customers the flexibility to bring together different AI models, enterprise data and use cases very specific to their vertical or industry area within a governed architecture for specific problem areas, rather than building each solution separately. As AI adoption matures, we are also seeing growth interest in agentic AI significantly, where intelligent agents can support and orchestrate more complex business and technology workflows. Our investments in reusable agents, accelerators, enterprise AI frameworks and reusable solutions are intended to help customers adopt these capabilities with the flexibility, security and governance expected in enterprise environments. The second priority for us is engineering and delivery. Today, 55% of all our projects are being delivered with AI enabled delivery. And 72% of our developers and testers are now using advanced AI tools in delivering the projects to our customers. And both these numbers will continue to grow with time very rapidly with all the training and skill development programs we have in place. Our AI service delivery platform, relyBuild, is designed to enable human engineers and AI agents to work together across the entire software development life cycle. And using relyBuild as well as the foundational models and agentic frameworks, we are embedding AI across coding, testing, documentation, application modernization and quality engineering with the objective of improving engineering productivity, quality and delivery speed. Importantly, our approach combines automation with established engineering controls and human oversight, so that productivity gains are achieved without compromising quality or security. This is where we believe AI can fundamentally change the engineering model. It is not only about automating the individual tasks across the SDLC or our service delivery, but increasingly about redesigning the entire service delivery workflows around collaboration between engineers and the intelligent AI agents. Our third priority is scaling what works for us with AI. We are seeing generative AI and agentic AI use cases progress towards live repeatable solutions. This transition is important because reusable solutions can reduce implementation effort, accelerate the deployment and allow us to apply proven capabilities across multiple customer environments. We are also encouraged by the momentum in our generative AI business services unit, which delivered approximately 135% year on year growth in constant currency terms in the first half of FY '27. While this business is scaling from relatively smaller base, the Generative AI Services business unit, the growth reflects increase, increasing customer adoption of AI use cases and AI native solutions. We are seeing these capabilities come together across our customer engagements, both implementing native AI architectures, using using the AI productivity tools and AI use cases. And we also combine this with the digital engineering, data, cloud and enterprise platforms to address industry specific requirements, whether in modernizing the applications, transforming engineering environments or improving operational processes. This ability to bring together AI with our broader engineering capabilities is important because customers are increasingly looking for solutions that can move from experimentation into their core technology and business environments. Of course, responsible AI remains central to this journey that we are taking our customers through. As adoption scales, security, data governance, model reliability and human oversight becoming increasingly important. We're therefore building these considerations to our platforms and delivery approach, rather than treating them as separate requirements. Going forward, our focus is clear, industrialize what works, strengthen our reusable intellectual property, expand adoption across customer environments and translate AI capabilities into measurable business and delivery outcomes. We believe the combination of our engineering heritage,
Sridhar Mantha (Happiest Minds Technologies Ltd): AI platforms that we've built and continue to build reusable solutions and increasingly AI-enabled talent base will be an important differentiator as enterprises are moving from experimenting with AI to scaling it across their businesses. With that, let me hand over to Venkat to take you through our financial and operational performance. Venkat, over to you.
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