Healthy pipeline, AI-led demand to drive Happiest Minds’ FY27 growth - The HinduBusinessLine SENSEX
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Happiest Minds’ FY27 growth Adjusted profit after tax (PAT) stood at ₹80.5 crore, rising 12.9% QoQ and 14.7% YoY,
while operating profit increased 2.3% QoQ and 11.8% YoY to ₹108.7 crore By Sanjana B Updated - July 29, 2026 at 08:54
AM.×ShareWhatsAppXFacebookLinkedInMessengerRedditMailhttps://www.thehindubusinessline.com/info-tech/healthy-pipeline-ai-led-demand-to-drive-happiest-minds-fy27-growth/article71277668.eceCopy
Venkatraman Narayanan, MD, Happiest Minds, and Joseph Anantharaju, Co-Chairman & CEO Happiest Minds reported revenue
of ₹628.5 crore for Q1FY27, up 4 per cent quarter-on-quarter (QoQ) and 14.3 per cent year-on-year (YoY).In constant
currency (CC) terms, revenue grew 2.6 per cent QoQ and 6.7 per cent YoY. Adjusted profit after tax (PAT) stood at
₹80.5 crore, rising 12.9 per cent QoQ and 14.7 per cent YoY, while operating profit increased 2.3 per cent QoQ and
11.8 per cent YoY to ₹108.7 crore.Joseph Anantharaju, Co-Chairman & CEO, and Venkatraman Narayanan, Managing
Director, discuss the company’s Q1 performance, demand environment, AI strategy, vendor consolidation, hiring trends,
and outlook for the rest of FY27. Any key highlights from the quarter? VN: We delivered a strong performance in Q4FY26,
and that momentum has continued into this quarter. Some of the key highlights include 14.5 per cent year-on-year revenue
growth and a 17 per cent increase in EPS to ₹5.34. This has also translated into improved return on capital employed
(ROCE) and return on equity (ROE).Following the QIP around two years ago, these ratios had moderated, but as we deploy
that capital more effectively, we’re seeing returns improve. If you adjust for some one-time costs during this
quarter, our operating margin is about 18.5-19 per cent. With that, we are entering the second quarter, where we
typically see an increase in costs due to wage hikes and other factors. However, we are entering the fiscal year with
strong revenue growth potential, supported by a healthy pipeline.Profitability-wise, the investments that we made are
paying off. GBS has become profitable. And the new business pipeline is doing well. Our guidance for the year is 12.5
per cent, and our task for the rest of the year is to focus on that growth.JA: Growth was driven by three geographies,
while others were flattish. India grew 9 per cent, APAC 10 per cent, and West Asia by around 6 per cent. APAC and West
Asia were driven by a few large banks where we saw good growth during the quarter. Across verticals, BFSI and healthcare
& life sciences posted growth during the quarter.EdTech recorded its second consecutive quarter of growth after
several quarters of decline, while the hi-tech segment grew 10 per cent quarter-on-quarter. Industrial and manufacturing
remained largely flat, whereas media and entertainment declined by around 4–5 per cent sequentially. The demand
environment is holding up despite all the headwinds -- the war, the political situation, and inflation.We are seeing
customers redirect savings generated from optimising their software development lifecycle — primarily through
productivity tools in support and maintenance functions — towards AI initiatives and innovation. Margins expanded both
sequentially and year-on-year. What were the key headwinds and tailwinds influencing margin performance? VN: The impact
of the rupee movement was relatively limited. While the currency moved by around ₹10, we incurred a forex loss of
about ₹11 crore on our forward contracts. Historically, a 3–4 per cent depreciation in the rupee has been a key
tailwind for the Indian IT industry, and that trend has broadly held over the last 20 years.At the same time, our growth
is increasingly coming from markets outside the US, including APAC, the Middle East and India. While these regions do
not provide the same currency tailwinds, they benefit from higher operating efficiencies driven by increased volumes.
Another tailwind is the higher-value work we’re undertaking in AI. Volume growth is broad-based across geographies,
including the US, but much of the delivery is happening offshore, particularly in India, the Middle East and Southeast
Asia. Are AI infrastructure investments or partnerships with frontier AI companies like OpenAI and Anthropic part of
your roadmap? JA: We will continue investing in capability building and in software and software platforms. We’ve
announced several AI-driven platforms, including the EduWeave platform and Insurance in a Box. We are also embedding AI
capabilities into Arttha and our Multi-omics platform to enhance functionality and deliver greater value to customers.We
have a platform still in the conceptualization stage in the CPG area. All of these would be AI-driven. We’ll stay out
of the AI infrastructure space because it’s a huge CapEx requirement and is currently in a dicey situation. In our
view, the only way those companies can recover their costs is by increasing token prices. If that happens, customers
will need to reassess the total cost of ownership (TCO) and the cost-benefit of deploying AI agents. Large IT services
firms have pointed to rising vendor consolidation. Are you seeing a similar trend among your clients? JA: Several
companies are carrying out vendor consolidation. It happened last year as well with a few mid-sized customers where we
became the primary, if not the sole vendor. But the few where we are participating are much larger entities; we’ve
managed to be shortlisted as one of the preferred partners.A key focus for us is expanding our footprint within our
existing large enterprise clients so that we’re well positioned to benefit if they undertake vendor consolidation.VN:
It’s natural for larger players to suggest that vendor consolidation will favour them at the expense of smaller firms.
However, our experience so far has been the opposite—we’ve benefited from consolidation rather than lost business
because of it. There’s growing demand for forward-deployed engineers, as several IT companies have highlighted. Are
you seeing a similar need within Happiest Minds? JA: We’re beginning to see that request and the demand. But everyone
looks at FDE differently. For instance, our AI Center of Excellence is looking at how we, as a team that is only focused
on productivity tools, build more, keep abreast of all the changes, build deeper capabilities in these tools, and help
customers and internal adoption as well. These people get embedded into our engagements to drive adoption of these
tools. They’re closer to an FDE. As we speak, a few of them were certified on Anthropic, and we’re aiming to drive
that number up.We’re currently looking at our entire talent map, assessing the different types of people we’ll need,
and in what quantities. That would include FDEs, Gen AI engineers, and people with expertise in cloud. As of now, around
40 to 50 of our people are classified as FDEs. There has been recent market speculation around a potential promoter
stake sale. Is there any clarification you would like to provide on this? VN: We have already clarified on that news
item. Currently, there are no disclosures required to be made under Regulation 30 of the SEBI (LODR) Regulations.
Discussions are happening, keeping in line with our growth plans. If something materializes, we’ll inform the
exchanges first. What’s your outlook for the rest of FY27, particularly in light of the current macroeconomic
uncertainties? VN: Our revenue grew 6.7 per cent in Q1. We had to stretch ourselves to make sure those numbers pan out
with respect to the 12.5 per cent currency growth. In the current year, growth is happening in Southeast Asia, Asia-Pac,
India, and the Middle East. Translating that to comparable constant currency is something we are struggling with. We
have a healthy pipeline, with project ramp-ups expected in the coming quarters.We have also signed three new clients
that are each expected to scale to teams of over 100 people. Our strategy has been to ‘land and expand’ rather than
pursue large, multi-year, multi-million-dollar deals upfront. As a result, any delay in client ramp-ups can affect
growth.That said, our pipeline is now beginning to include larger deals, which is encouraging. Normal run-the-business
growth, plus the pipeline health, along with the value increase coming from these non-linear growth platforms, is
expected to take us above 10 per cent and closer to that 2.5 per cent. Comments Published on July 29, 2026 READ MORETHIS
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