The Rs 702 crore initial public offer (IPO) by Happiest Minds was subscribed 3.19 times on Day 2 of the bidding process on Tuesday.

By 10.15 am, the issue received bids for 7,42,16,790 shares, which was 3.19 times the issue size of 2,32,59,550 shares. The issue had received bids for 6,67,09,800 shares till Day 1, which was 2.87 times the issue size.

The digital company, whose issue is being sold in Rs 165-166 price band, raised Rs 316 crore on Friday from 25 anchor investors including Government of Singapore, Goldman Sachs, Kuwait Investment Authority, Nomura Funds Ireland, Jupiter India and Pacific Horizon Investment. At the upper price band, the issue is seeking a valuation of 26.76 times FY20 earnings per share.

Angel Broking said that given the high exposure to digital services and strong promoter background, the company will continue to grow at a faster pace as compared with similar sized companies and, therefore, should command a premium valuation to the peer group.

Choice Broking said the issue seems to be fully priced compared with its domestic peers. But it noted that the company cannot be fully comparable with the domestic IT peers. "There are international peers, who derive almost all oalmost all of their revenue from digital services, trading at a P/E multiple ranging from 67-139 times. Assuming the valuations of these companies in the US markets to be frothy, the valuation demanded by Happiest Minds seems to be attractive," it said.

Motilal Oswal Securities said the company's valuations are comparable to larger mid-sized IT companies. It likes the company given its strong presence in digital services, business model with end-to-end capabilities and fast improving financial performance.

"Investors can Subscribe to the IPO. Further considering market conditions and bright prospects for IT companies post Covid-era, one may also get listing gains," the brokerage said.