HCL Tech's first quarter profits jumped by 167% year on year driven by higher other income. However on quarter on quarter basis the profits increased by 15%. HCL Tech has fostered the concept of multiple growth windows, resulting in a non-linear growth model, wherein the company seeks to supplement its organic growth through diverse avenues (like joint ventures and acquisitions).
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Increased contribution (72% of total revenues) from high value add, high margin services (technology development services, software product services and networking services) improved the profit margins of the company to 29%.
HCL has de-risked its business by reducing its client concentration. Its top 5 customers accounts for 23% of total business and 69% of revenues are from repeat business from existing clients. The company has also added 17 new customers during the current quarter.
At the current market price of Rs 1,066 HCL Tech is trading at a P/E ratio of 39 times its 1QFY01 annualised earnings.
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