Thread by @Finstor85

So we are going to discuss a young digital co promoted by big names. The price has rallied exponentially & valuations are through the roof. This is an attempt to discover where the value lies & what's worth.

https://twitter.com/Finstor85/status/1474816289176702980

I have tried to be as balanced, neutral with my analysis as I could. Positive & Negatives, wherever applicable are duly presented. It is up to you to take this view or not. And pl, rising price can't ever justify lagging fundamentals.

If you are keen to understand business, read on. Those who care about price can ignore this one. Here is to #happiestminds

* Industries & Domains - Airline, Auto, Banking, CPG, Ecom, Education Publishing, Energy & Utility, Health, Manufacturing, Media & Ent, Retail, Travel & Hospitality

* Services - Agile Infra, Data Management, DX, Managed Infra & Security, Product Engineering, IT security, Web Technologies.
Basically, they position as the almighty of tech - do everything, everywhere.

* Products - covered in depth further down in this thread
APPrise
DASP
Data Accel - Link Broken
MCaaS
iSaaS
LO-MO-ME - Link Broken
MIDAS
dCOB

* Cloud/Digital? Co is apparently is born digital, earns over 95% rev. from digital services. It is important to define what means digital & how is it different from traditional.

* USP - I don't know, Digital is a]the need, not USP. Just look at the website & presentation makes me think that co wants to do everything in every tech, every sector, all digital. Realistically, that's not possible. Or I am royally wrong & biased cuz of my industry experience.

It takes at least 3-4 clicks to find out that iSaaS has further modules of which ThreatVigil is nothing but Network Penetration testing, Application Penetration Testing & Mobile Security. Why wrap it in a flashy exterior?

IT companies have been doing penetration testing for decades! This is just an old candy wrapped in a new wrapper, offered as SaaS. Doesn't mean it entails value

Similarly, in blockchain, co claims to offer security services which includes Denial Of Service & Man in the Middle!! Come on! DoS is not a blockchain threat! I agree DDOS attacks can happen on blockchain but only on PoW chains.

Which leading chain is on PoW? Only Lightening! ETH is transitioning, Polygon/DOT, SOL are all PoS already. Even if a private chain is launched, it will be PoA not PoW!

Genesis block tampering - We are not in 2012. No matter what you do, tampering genesis block is not possible unless you are on PoW chain & take over 51% of computing capacity. And on PoS chain, this is impossible.

If you tamper the genesis block, all the subsequent hashes of all the blocks in the chain stand invalid, the chain entirely becomes invalid & it is just not possible to tamper genesis block.

A genuine network(chain) has L1 & L2 chains/side chains who handle transaction/settlement & rolls up to L1. The block generation frequency slows down as you start tampering a block. And, it is not a DMA - Direct Memory Access that allows you to reach to genesis block directly.

You have to tamper most recent block first and then go to genesis. By the time you reach Genesis+1 block in reverse order, the block generation frequency will be infinite. How will you ever tamper genesis block on a mature blockchain platform? I have no answer to this.

* Client Profile - 186 active clients. Top 20 clients contributes 61% rev., top 10 contributes 46.3%.

* Revenue Profile - 46.2% rev from product engineering services, 29.4% from Digital Business Services, 21% from infra managed services, 3.4% is from other. Rev. has grown v good at 18% CAGR over last 4y.

What makes me wonder is their utilization levels are very low in given context. At 79% it is too low! 95% offshore & less than 5% onsite clearly shows it is pure outsourcing, low value business that's coming in.

Although, we can say post covid that remote work has cleared all the boundaries, but I still find this little odd since this ratio was at same level pre-covid as well.

Typically, when you onboard a co for its digital journey, you have to handhold client at various levels which calls for onsite presence. I have experienced how design gaps are left unaddressed when you are not face to face with customer

WFH works for those who are hands on. For architects, solution experts, you have to collaborate with customer in the initial workshop, blueprinting phase & there is no alternative to that

What I find good is share of TM contracts is very high. 75%+ TM contracts indicate rev visibility. Digital rev. is 42.8%, 19.6% for SaaS, Analytics/AI at 12.5%, IoT is 9.8%

Vertical rev split is also healthy & diverse so there is no single point of risk here.

* Scale Profile - If co positions it properly, does really genuine projects that create accelerators, digital assets, frameworks etc, the scale can be just exponential. However, right now there is no such visibility

You can't just get swayed by buzz words - Look at website. Not one buzzword is missed by co to mention. Basically, that means you are just a low end execution partner & not a value creator

Because it is just not possible for a co to build such capabilities to such depth in such short span of time. It isn't realistic. The Soota card is at play & perception worked very good for the co

Born digital tagline precisely when the world is WFH, digital transformations are through the roof, it gave perfect ground to position the co but my personal view is there is not enough meat on the bone

All the buzzwords & associated services mentioned by co are at basic barebone level. If you look at the work done by TCS in blockchain space you'd understand what real work & real edge looks like

And when you put all these things together & then look at client profile you understand why they have only one $10m customer despite having 46 billion $ logos under the belt.

But it is too soon. I am not here to talk all negative. I know what they do can become big in given global context. They can strategically grow existing customers, gain more pocket share from such big billion $ companies

But they need to do really groundbreaking work. So far all they are doing is vanilla IT outsourcing. The value creation portion of the work must increase. Company is v young so it would take time

But the way it is positioned in the market, we need some really strong consolidation, testing phase before we can conclude that company is any worth for new buck.

I know I will get a lot of remarks on you missed the opportunity hence talking like this & look at price, you'll learn a lesson. How can you justify fundamental thesis based on price?

I have seen many instances of insane price rally, perceptions & narratives forming up, and then cos going bust. Kelton is a classic e.g. of this. Stampede cap anyone?

Will I pay this price of 1200-1300 for EPS of 12? Absolutely not. They major risk is risk of over promising & under delivering. Right now situation is supportive, it won't be like this forever. So your risk mitigation is your buying price

If you hold it from 400 or below. Stay in. But for fresh investment, it is too risky. This is my view & if price rallies further does not mean I went wrong!

Let's move to individual products / services now to have a deeper look.

APPRise - Very basic app that helps cos monitor their mobile apps on usage, exceptions etc. It helps companies monitor exception reports, hardware usage stats, and basically capture user data on how he/she used the app.

Very basic. Supports only Android Apps!

Data Accel page reroutes to home page, so not able to pull any information on this. Why is it still on the website if link is nonfunctional? Don't they do broken link analysis on their own webpage?

mCaaS - This solution empowers organizations to derive relevant information from enterprise content and digital assets in the most efficient manner by ingesting content into an AI powered engine. Sorry, what?

You have to simplify, simplify, simplify! That's the basic principle of the digital. There are a bunch of buzzwords like NLP, RPA, AI ingestion, segmentation but brief look doesn't tell me what this product does

Let me simplify what a digital asset broking is - In digital age, images can be converted into NFTs, or songs, scripts, logos etc. Basically, you can convert any physical asset into digital & consume it at various places

For e.g. Listing on OpenSea or Consuming it in a metaverse as an avatar or consuming in a game as a character or just use in gamification. One digital asset can have multiple journeys & hence multiple consumption & monetization pathways

A digital asset broker consolidates every consumption path & gathers data on how someone uses it - let's call it a segmentation. Based on that, you can develop monetization methods or track royalties etc

What mCaaS seems to be doing is very basic - images, videos, infographics etc & does everything I mentioned above for some basic business use case. But this has a super potential if positioned right

iSaaS - I talked about it already. They claim to be security as a service but it is nothing more than penetration testing on demand! What I like, however, is presence in SDN & NFV

SDN is software defined network & NFV is Network functions virtualization. SDN when teamed up with NFV brings real value. SDN & NFV both use network abstraction where both separate certain functions

SDN separates control functions from forwarding functions - certain functions control the network, while certain handle request forwarding.
NFV separates the forwarding functions further from the hardware that services the request

SDN typically executes on NFV! The next player who has very strong capabilities in SDN is #Tataommunication.

Lo-MO-ME Location Mobile Personalization link is broken as well.

MIDAS is positioned as an IoT analytics solution but it is a small part of much bigger offering. As a part of their IOT platform services where Happiest Mind claim to help design, build, and run IoT platforms, MIDAS integrates into this as an additional offering.

I think this has a huge potential is leveraged right. For e.g. a telematics case study on the cos website shows an amazing use case for mobility & self driven cars. This area has a lot of promise. I like MIDAS as a part of whole offering

Individual analytics solution does not make a business case. There are companies like Latent View & analytics services offered by our biggies would make it irrelevant eventually, but if it is grown under IOT platform service then MIDAS makes a lot of sense

dCOB is a customer onboarding platform. This is industry agnostic onboarding solution with real-time scanning, biometrics solutions integrated within. But there are numerous peers who offer similar solutions so I don't see any distinctive edge in this

I know it is getting to long now. Let's quickly see what "digital" they do? Connected Retail & Pricing Merchandising solution are two very promising solutions.

Virtual shopping, ESL, Proximity Marketing, Smart Shelf and so much more is done through connected retail offering. In store analytics, customer traversing etc is all very promising but it is not showing up in client profit yet.

The pricing solution is basically proprietary price recommendation solution for retail that does price reco, price management, price discovery, dynamic pricing etc. But this space is dominated by Revionics!

Revionics leads, dominates, dictates the retail pricing! Price FX, Vistex DMP etc are competitors who have strong operational history, customer referencing that makes life even more harder for Happiest Mind

I don't know why Happiest Mind would venture into this segment. It is very niche & dominated by big players. I know this since I work as a pricing consultant in my professional capacity & have worked on all above platforms

If I go by menu, twitter will ban me from posting threads. It would get that long & I have write an article for this. But let's sum up.

I'd categorize Happiest Mind in following way

1. Products/Solutions that cater both onprem, cloud needs. This can be traditional as well as digitl
2. Service - Digital & Traditional.

Services I'd further categorize as below

1. IoT/Analytics
2. Data Services
3. Cloud & network managed infra services
4. Application development & maintenance
5. CX & DX

Everything else they say they do can be categorized in one or more of these. For now, a look at their website is just verbal buzzword overdoes. I really would like to some simplification in near future

More clarity on real customer use cases would be amazing on how a customer used a certain product to transform something. All companies post customer case studies under customer referencing

If tomorrow TCS starts mentioning every business segment they have served, they would have to write a directory with index just. If you have a client in ecom or education & you've built some accelerator for them you can't put it as a whole segment up on website!

To sum - It is too early to see HappiestMind as next big thing on the block. They have to do some really groundbreaking work that drives value. Simplify offerings, consolidate services, show resilience when DX spends slows down.

I would be keen to invest at right price where I find value. This is my & my alone understanding of the business. I'd love to see co growing from a potential shoot to a tree down the line but right now there are too many IFs-THENs.

Again, there is only so much can one know about the business. If you think I missed something, pl be so kind & mention it politely. This is in no way rejecting the co. This just an attempt to find where the value lies.