FINANCIAL MODELLING OF THE COMPANY “HAPPIEST MINDS”

Abstract

The process of company valuation entails a comprehensive analysis of all facets of a business, including its various divisions or components, intending to determine their respective worth. Determining a business's true market worth through company valuation is commonly employed for various purposes, such as transaction value, ownership establishment, taxation, and legal proceedings related to divorce. Business owners often seek the expertise of professional evaluators to obtain an impartial evaluation of their company's value. The practice of determining the monetary worth of a business is frequently carried out in scenarios where a corporation plans to sell off a portion or all of its activities or when it aims to participate in a consolidation or takeover with another organization. Thus, this paper aims at evaluating the intrinsic value for the company named Happiest Minds (NSE: HAPPSTMNDS), using one of the most popular methods of company valuation known as Discounted Cash Flow (DCF) model. Founded in 2011, Happiest Minds is an IT Service Company that helps enterprises across industries in their digital transformation journey. It strongly focuses on new-age technologies such as AI, Cloud, Security Solutions, SaaS, IoT, etc. This study aims to identify the approximate value of the company using the information which has been made available by the company in the public domain like the annual reports which include the basic financial statements like the Balance sheet, Income Statement and Cash Flow statement. Apart from that it also includes management discussion and analysis part which helps the reader to get an idea about the company’s future direction or expansion strategy. The future data has been forecasted for a period of 5 years, and then after that, the terminal value has been calculated for the company. We have taken a forecasting period of 5 years as it is considered to be an appropriate time period to make conclusions about the future growth, direction, and stability of the company. Various helper forecasts like the capital expenditure schedule, working capital schedule, and debt schedule have been formed, aiding in the overall forecasting process. Since it is just a forecast, so several things will be as per the knowledge of the reader and what he expects from the company, and the entire industry or sector to perform in the coming years, which is one of the limitations of this study.