Happiest Minds Technologies CEO Joseph Anantharaju and MD Venkatraman Narayanan ruled out any layoffs following the merger announcement with ITC Infotech, emphasizing that the deal is focused on expanding talent and capabilities rather than cost reduction. As reported by PTI, Anantharaju stated that ITC leadership had assured that the entire workforce and leadership team would remain in place, with the primary reason being to preserve Happiest Minds' deep capabilities in digital data, cybersecurity, and AI. Narayanan emphasized that the long-term strategy is centered on achieving greater scale, expanding hiring capabilities and establishing new delivery locations, rather than cutting employee-related expenses. The executives noted that while new structure discussions may lead to slightly different responsibilities, they anticipate no leadership changes given the company's strong pipeline and order book.
Happiest Minds shares fell another 2.5% to ₹354.5 on Wednesday, extending losses as brokerages continue assessing the proposed merger benefits and execution risks. HDFC Securities downgraded the stock to 'Add' from 'Buy' and cut its target price to ₹400 from ₹440, citing that the deal valuation limits upside potential. The brokerage highlighted that the transaction offers no takeover premium to Happiest Minds shareholders, while the roughly 15-month integration timeline and uncertainty over retention of the existing management team pose significant risks. However, Choice Institutional Equities retained its 'Buy' rating with a target price of ₹440, noting that given the recent correction, Happiest Minds trades at 18.8 times FY28 earnings, which offers a favourable entry point given the potential benefits from the combination. The Hindu BusinessLine recommends buying Happiest Minds with a target price of ₹415, valuing the company on June 2027E EPS using a one-year forward P/E target of 22x. Both brokerages' target prices imply around 13-17% upside from Happiest Minds' current market price.
ITC shares traded higher, up 0.5% at ₹268 in afternoon trade, placing it among the top Nifty 50 gainers despite a weak broader market. The conglomerate's positive performance contrasts sharply with Happiest Minds' continued decline, reflecting investor confidence in the strategic acquisition. PhillipCapital's Karan Uppal flagged uncertainty for Happiest Minds until the merger and subsequent listing are completed, potentially over the next one to one-and-a-half years, raising concerns about leadership clarity as the combined company takes shape. For ITC, analysts see the transaction as a way to strengthen ITC Infotech without materially altering the investment case for the much larger parent. Morgan Stanley noted that the deal was small relative to ITC's overall market value, but could expand ITC Infotech's US presence, broaden its client base and improve its capabilities.
The merger involves ITC Infotech acquiring a 22.1% promoter stake in Happiest Minds for around ₹1,330 crore, followed by a merger where Happiest Minds shareholders will receive 25 ITC Infotech shares for every 81 shares held. Post-amalgamation, ITC Ltd will hold a 73.4% stake in the merged entity, while Happiest Minds' shareholders will own the remaining 26.6%. Happiest Minds' promoter Ashok Soota is divesting 22.1% of his 44.2% holding in two tranches as part of the merger process. The transaction values Happiest Minds at ₹6,167 crore and ITCI at ₹11,920 crore, implying FY26 enterprise value (EV)/operating profit before depreciation and amortisation (EBITDA) multiples of 15.1 and 13.6 respectively. The implied market cap of the merged entity will be ₹18,060 crore. The transaction requires regulatory and shareholder approval, and the expected timeline for closure is 15 months. The merged entity would become India's 11th-largest listed IT services company, with pro-forma FY26 revenue of about $791 million, more than 19,000 employees and operations across over 30 countries. The merged entity is expected to get listed on the BSE and NSE by Q2 or Q3FY28, with Happiest Minds being delisted and amalgamated into ITC Infotech.
The combined entity brings complementary capabilities with Happiest Minds specializing in generative AI, data, cloud, digital product engineering, and cybersecurity, while ITC Infotech is stronger in SAP, product lifecycle management (PLM), Industry 4.0 and enterprise transformation. The combined business would have more than 800 clients, with little overlap among their largest customers. The combined entity will achieve substantial scale, employing more than 19,000 professionals operating across more than 30 countries, providing deeper talent and geographic reach. Choice Institutional Equities notes that the merged entity will be able to operate at scale, have a geographically diverse presence and cross-sell while getting access to large enterprise deals. The combined entity has set a target of $1 billion in revenue in fiscal year 2028, with the merger expected to be completed by second or third quarter of fiscal 2028. The combined entity's pro-forma adjusted EBITDA margin of 18.1% is below ITC Infotech's 18.5%, making the transaction mildly dilutive to ITC Infotech initially, though margin benefits may take time to materialize. The transaction advances Happiest Minds' own $1-billion revenue ambition from FY31 to FY28 through the combination with ITC Infotech.
Happiest Minds shares have fallen for five straight sessions, wiping out the stock's three-month gain of 21% entirely due to uncertainty related to the ITC Infotech integration. The stock closed at ₹354.5 on the BSE on Wednesday, reflecting continued investor concerns about the merger execution. While the company ended FY26 with revenue of ₹7,033 crore, it is guiding for revenue growth of 12.5% on a constant-currency basis and expects to hit the $1 billion mark by FY28. Angel One's technical analyst Hitesh Rathi argues that Happiest Minds is showing signs of a possible medium-term base formation, with the stock having built strong support in the ₹330-340 band, where it has formed a bullish double-bottom retest. The deal will offer the required size for the combined entity to bid for larger deals, with ITCI focusing on verticals including consumer, hospitality and manufacturing while HMT caters to banking and finance, EdTech, and healthcare, suggesting lower overlapping in services. The merged entity expects to cross $1 billion in revenue by FY28 at 19.1% EBITDA margin.
