Shares of India's Happiest Minds Technologies Ltd more than doubled in their stock market debut on Thursday, underscoring strong investor interest in IT services firms during the COVID-19 pandemic.
The stock opened at 350 rupees, well above its initial public offering (IPO) price of 166 rupees that valued the company at about 24.4 billion rupees ($331 million). At its high of 394.95 rupees, the company was valued at 58 billion rupees.
Exchange data showed investors had bid for nearly 151 times the number of shares on offer from the company led by Ashok Soota, a veteran of India's nearly $200 billion IT industry who also co-founded larger firm Mindtree Ltd. Soota is also Happiest Minds' top individual shareholder.
The Bengaluru-based company derives 97% of its revenue from fast-growing digital IT services - such as analytics and artificial intelligence- and cloud-enabled services - compared with 30%-50% for traditional Indian IT services peers, analysts at Motilal Oswal estimated this month.
“Investors are realising the resilience of the sector as well as strong demand for IT, post the COVID-19 crisis,” Sneha Poddar, an analyst at Motilal Oswal said on Thursday.
“The fact that Happiest Minds comes from a strong management background also acts as a key positive ... as people have seen how Mindtree has performed.”
In the year ended March 2020, Happiest Minds’ revenue jumped 18% to nearly 7 billion rupees, IPO documents showed, while it reported a profit of 717 million rupees, about five times as much as a year earlier.
India's IT stocks have been among the few sectors to clock gains in 2020, gaining 28% so far this year.
The Indian stock market has seen only a handful of IPOs this year compared with more than a dozen in 2019, as the coronavirus crisis hammered risk appetite. The highly awaited listing of SBI Cards and Payment Services Ltd, the year's biggest, got a tepid response in mid-March.
Reporting by Sachin Ravikumar and Chris Thomas; Editing by Anil D’Silva and