'Downright hypocrisy' - analyst reacts to Infosys CEO exit

21 August, 2017, 21:07 | Author: Leticia Walters
  • Infosys CEO Vishal Sikka and co-chairman Ravi Venkatesan had a tough working relationship on the board

On Friday, the Infosys stock touched a 52-week closing low of Rs 923.10, falling 9.6 percent on the news of Sikka's exit.

A reported email from Infosys co-founder Narayana Murthy, which alluded to recently ousted ex-CEO Vishal Sikka as "CTO material rather than CEO material", is a claim which "smacks of irony at best and downright hypocrisy at worst", according to one analyst. As per reports by PTI, the fast-paced developments at India's second-largest IT firm were the talking point throughout as the stock took a severe beating dragging down the markets. State-run oil explorer and marketing company ONGC has replaced Infosys to become the tenth most valuable company on BSE.

Infosys and its larger rival, Tata Consultancy Services Ltd, also face a USA administration that's cracking down on the work visas the companies need to serve key American clients.

"Infosys has underperformed Sikka's lofty goals set in 2015 and has seen a sharp slowdown in growth", said Rudra.

"Infosys will have to move quickly to establish a new governance mechanism for its top clients and reassure them it is still committed to the vision Sikka had articulated", Peter Bendor-Samuel, CEO of IT consultancy Everest Group, told ET. "While in near term it's (Dr Sikka's resignation) a setback for the company, but given the strength of the board of the company, we believe that the company will be overcome the setback", Sarabjit Kour Nangra, VP (Research- IT) at Angel Broking said. Vishal Sikka also blamed a continuous stream of "false, baseless, malicious and increasingly personal attacks" that were "amplified by the very people from whom we all expected the most steadfast support". The company's market value surged by US$4.6 billion to US$31.78 billion over the period.

Sikka's resignation is the second major instance in the past year where Indian promoters have wielded control over the company after handing over the reigns.

Infosys, which counts Apple, Volkswagen and Wal-Mart Stores among its customers, has underperformed the Nifty IT index this year amid the attacks from its founders and its USA challenges. "He was trying to make Infosys an innovation-driven company, not a commoditised service provider", said an Infosys engineer who asked not to be named because of the sensitivity of the issue.

"This does not augur well for the future of the company, for the shareholders, big and small, and more importantly for the employees", said Gaurang Shah, head investment strategist at Mumbai-based brokerage Geojit Financial Services.

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