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 ₹353.65 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, Axis Securities retained its 'Buy' rating with a target price of ₹415, noting that shareholders could benefit from stronger scale and diversification of the merged company, along with cross-selling opportunities across a larger client base. 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%. The transaction is expected to be completed within the next 15 months, requiring approvals from multiple authorities including the CCI, exchanges, NCLT, shareholders and creditors. 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. Management is targeting more than $1 billion in revenue by FY28, supported by around 10% revenue synergies and a 100-basis-point improvement in margins.
The combined entity brings complementary capabilities with Happiest Minds specializing in generative AI, data, cloud, digital engineering and cybersecurity, while ITC Infotech is stronger in SAP, product lifecycle management, Industry 4.0 and enterprise transformation. The combined business would have more than 800 clients, with little overlap among their largest customers. As reported by The Economic Times, 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 tumbled nearly 11% on Tuesday, declining 10.92% to close at ₹362.70 on the BSE after the merger announcement, with the stock touching an intraday low of ₹357, down 12.31%. In contrast, ITC shares gained 3.98% to close at ₹266.45 on the BSE, reflecting positive investor sentiment toward the strategic acquisition. Despite the continued decline, Angel One's technical analyst Hitesh Rathi argues that Happiest Minds is showing signs of a possible medium-term base formation. The stock has built strong support in the ₹330-340 band, where it has formed a bullish double-bottom retest, with Rathi recommending that the current fall can be utilized as a trigger to accumulate the stock at current levels while maintaining a strict medium-term stop loss in the ₹330-335 range.
