In this edition of ‘Momentum Pick’, we bring to you a stock that has given staggering returns over a 12-month period and Year-to-Date (YTD). With returns of 285 per cent in 1 year, the Bengaluru-based Happiest Minds Technologies Limited is into a consolidation phase now, after a dream run on the exchanges. Will the rally continue, and should you buy this stock at current levels?  This is what the experts say! 

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Led by Ashok Soota, the company delivers services in artificial intelligence, blockchain, cloud, digital process automation, internet of things, robotics/drones, security and virtual and augmented reality among other things. 

In the YTD, the returns given by Happiest Minds is 258 per cent. The stock has outperformed the BSE Sensex by over 250 per cent in the 12 months period and is moving above its 200-day moving average while lower than 5-day, 20-day, 50-day and 100-day moving averages. It has also been witnessing higher investor participation.      

 Is it time to buy the stock? 

The stock has been witnessing correction over the past four trading sessions during which it has fallen by 6.4 per cent. On Monday, the stock fell 2.5 per cent or by Rs 32 to settle at Rs 1233 on the BSE. The stock not only underperformed the sector but also the sector.  

Technical Analysis 

HOLD| LTP: Rs 1233| Target: Rs 1300/1500| Stop Loss: Rs 1100| Upside 21% 

Technical Analyst Nilesh Jain, who is Assistant Vice President (AVP), Equity Research Technical and Derivatives at Centrum Broking recommends a hold on this stock for existing investors. As for, new investors willing to make positions, a buy on decline is advised in a staggered way below the levels of Rs 1200.  

Jain said that the stock has seen considerable upside and the risk-to-reward ratio is not favourable at the current levels. He sees level of 1300 as a crucial hurdle and an upside up to Rs 1500, if the stock surpasses this. It is a long term buy warning investors of a near term correction that is likely to continue, he added.  

The Relative Strength Index (RSI) showed a bearish trend on the BSE. RSI is an indicator of price momentum. The stock is oversold as per Edelweiss.  

Fundamental Analysis 

HOLD| Target: Rs 1500/1550| Upside 26% 

Another Analyst Sandeep Jain also recommended a hold on this scrip. He said that it is a long term stock, considering the niche in which it works. The stock is in consolidation phase, he said indicating some more correction on the back of current market turmoil.  

He said that the company is strong and has delivered good quarterly results. The Consolidated net profit for the September 2021 quarter was up 24 per cent sequentially. The net sales for Q2FY22 was marginally lower at 8.14 per cent sequentially. Operating profit was also higher for the reporting quarter on Quarter-on-Quarter (qoq) basis. 

He said that the valuations are on a higher side and one must not make fresh positions at current levels. The right levels to enter the stock is between Rs 1100 and Rs 1200, the Tradeswift Director said. It has made a double top at 1580, which is a resistance, he added.  

The stock is trading at a PE multiple of 111 and the Price-to-Book value of just under 31. 

It is more expensive than its peers like Coforge Limited, Persistent Systems Limited, Tanla Platforms which are already trading at a high premium. 

The promoter holding is around 53.25 per cent with no promoter’s pledge. The Foreign Institutional Investors (FIIs) have increased their stake in the September quarter. 

(Disclaimer: The views/suggestions/advises expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)