Happiest Minds Q2 revenue grows 12.5%, margin reaches 18.5%

Happiest Minds reported Q2 FY27 revenue of Rs 645.43 crore, up 12.5% year on year, and operating margin of 18.5%, up 150 basis points from Q2 FY26. Reported profit after tax was Rs 62.19 crore, 8.0% below Q1 FY27, while adjusted profit after tax declined 1.8% sequentially to Rs 79.11 crore.

How did Happiest Minds perform in Q2 FY27?

Happiest Minds increased revenue to Rs 645.43 crore in Q2 FY27 from Rs 628.51 crore in Q1 FY27 and Rs 573.57 crore in Q2 FY26. This represented 2.7% quarter-on-quarter growth and 12.5% year-on-year growth. Total income, including other income, reached Rs 665.99 crore, compared with Rs 652.20 crore in Q1 FY27 and Rs 595.18 crore a year earlier.

Operating margin was Rs 119.11 crore in Q2 FY27, up 9.6% from Rs 108.68 crore in Q1 FY27 and 22.4% from Rs 97.33 crore in Q2 FY26. Operating margin as a percentage of revenue was 18.5%, compared with 17.5% in the preceding quarter and 17.0% a year earlier. The margin therefore increased by 100 basis points sequentially and 150 basis points year on year.

For HY 27, revenue rose 13.4% year on year to Rs 1,273.94 crore from Rs 1,123.47 crore in HY 26. Total income increased 12.2% to Rs 1,318.18 crore, while operating margin increased 17.1% to Rs 227.78 crore and the margin percentage moved to 18.1% from 17.3%.

What changed in Happiest Minds’ operating profitability?

Happiest Minds’ earnings before interest, tax, depreciation and amortisation, or EBITDA, were Rs 142.04 crore in Q2 FY27, 0.5% above Rs 141.29 crore in Q1 FY27 and 18.1% above Rs 120.27 crore in Q2 FY26. EBITDA margin was 21.3%, which was 1.1 percentage points above the 20.2% reported a year earlier but 0.4 percentage points below Q1 FY27’s 21.7%.

The operating-margin trend differed from the EBITDA-margin trend because operating margin increased in both comparisons, reaching Rs 119.11 crore and 18.5% in Q2 FY27. In HY 27, operating margin was Rs 227.78 crore, or 18.1% of revenue, versus Rs 194.55 crore and 17.3% in HY 26. EBITDA for HY 27 was Rs 283.33 crore, with a 21.5% margin, compared with Rs 244.33 crore and 20.8% in HY 26.

Return on capital employed, or RoCE, was 24.0% in Q2 FY27, marginally above 23.9% in Q1 FY27 and 22.8% in Q2 FY26. Return on equity, or RoE, was 14.7%, compared with 15.5% in Q1 FY27 and 13.8% a year earlier; the quarterly RoCE and RoE figures are annualised in the presentation.

Why did Happiest Minds’ reported Q2 profit decline from Q1?

Happiest Minds’ reported profit before tax, or PBT, declined 7.4% sequentially to Rs 83.53 crore in Q2 FY27 from Rs 90.20 crore in Q1 FY27, although it was 15.0% above Rs 72.66 crore in Q2 FY26. The company recorded Rs 3.98 crore as an exceptional item during the quarter for the proposed merger with ITC Infotech. It also reported Rs 10.55 crore of amortisation and unwinding interest, described as non-cash items related to acquisitions.

Reported profit after tax, or PAT, was Rs 62.19 crore, compared with Rs 67.60 crore in Q1 FY27 and Rs 54.02 crore in Q2 FY26. After adding back the exceptional item and amortisation of intangible assets, adjusted PAT was Rs 79.11 crore, down 1.8% sequentially but up 20.7% year on year. Adjusted earnings per share, or EPS, was Rs 5.25, compared with Rs 5.34 in Q1 FY27 and Rs 4.46 in Q2 FY26.

What do Happiest Minds’ revenue mix and operating metrics show?

Happiest Minds derived 93.1% of Q2 FY27 revenue from Agile work, down from 93.7% in Q1 FY27 and 94.2% in Q2 FY26. Product & Digital Engineering Services, or PDES, accounted for 76.7% of revenue, Infrastructure Management and Security Services, or IMSS, contributed 17.9%, and Generative AI Business Solutions, or GBS, represented 5.4%. The presentation’s rounded historical series shows total income rising from Rs 595 crore in Q2 FY26 to Rs 665 crore in Q2 FY27.

Time-and-materials contracts accounted for 68.3% of revenue and fixed-price contracts for 31.7%. The Americas contributed 56.3%, India 18.0%, Asia-Pacific 9.0%, Europe 7.8% and the rest of the world 8.8%. By technology, Digital Infrastructure and Cloud represented 50.7% of revenue, software as a service was 20.6%, and artificial intelligence and analytics was 13.3%.

How did Happiest Minds’ customer and workforce measures change?

Happiest Minds had 311 active customers in Q2 FY27, up from 306 in Q1 FY27 and 290 in Q2 FY26, while its number of million-dollar customers remained 52 for a third consecutive quarter. The top five customers accounted for 28.7% of revenue, the top 10 represented 42.4%, and the top 20 represented 58.7%. In FY 26, customers with relationships of five years or less generated 58% of revenue, compared with 42% from relationships older than five years.

Utilisation was 81.8% in Q2 FY27, compared with 80.9% in Q1 FY27 and 80.7% in Q2 FY26, while headcount was 6,466, down from 6,532 sequentially. Offshore delivery represented 92.9% of the workforce mix and onsite delivery 7.1%, versus 93.1% and 6.9% respectively in Q1 FY27. Trailing-12-month voluntary attrition declined to 14.3% from 15.4% in Q1 FY27 and 17.4% in Q2 FY26.

Conclusion

Happiest Minds combined 12.5% year-on-year revenue growth with a 150-basis-point operating-margin improvement in Q2 FY27, lifting operating margin to Rs 119.11 crore. EBITDA rose 18.1% year on year, while reported PAT declined from Q1 FY27 and adjusted PAT showed a narrower 1.8% sequential reduction after the disclosed exceptional item and acquisition-related non-cash charges.

The next disclosed matter to watch is the status and financial effect of the proposed merger with ITC Infotech, for which Happiest Minds booked Rs 3.98 crore of exceptional cost in Q2 FY27. Subsequent results will also show whether the 18.5% operating margin, 311 active customers, 81.8% utilisation and 14.3% trailing-12-month voluntary attrition are sustained.