HAPPIEST MINDS–ITC INFOTECH MERGER: VALUATION AND GROWTH

Happiest Minds Technologies shareholders are set to receive an estimated 11% premium under the proposed merger with ITC Infotech, based on the relative valuation multiples assigned to the two companies, Managing Director Venkatraman Narayanan said. However, the merged entity will need to significantly accelerate revenue growth to achieve its ambitious target of reaching $1 billion in annual revenue by FY28. Narayanan’s comments come amid market skepticism following the merger announcement, which triggered an over 8% decline in Happiest Minds shares. Some analysts and minority shareholders questioned the deal structure, pointing out that the implied valuation of ₹405 per share represented little to no premium over the stock’s previous closing price. Concerns were also raised over the promoter’s proposed 22.1% stake sale, which remains below the 25% threshold that would trigger a mandatory open offer. The boards of ITC and Happiest Minds, along with their independent directors and financial advisers, were involved in the valuation process. According to Narayanan, the companies considered market comparables, discounted cash flow analysis and transaction multiples before finalising the merger’s share-swap ratio. The merger is expected to create a sizeable IT services company with FY26 revenue of approximately ₹7,000–7,331 crore, a workforce of more than 19,000 employees and over 800 clients across 30-plus countries. The combined entity is expected to become India’s 11th-largest listed IT services company. For Happiest Minds, Narayanan said the merger would help address several challenges that have become increasingly important as the company has grown, including geographic and vertical concentration, customer access, talent availability and balance-sheet scale.