A slew of brokerage downgrades of Infosys shares following the unexpected resignation of Vishal Sikka on Friday knocked the second-largest information company from the list of top 10 companies by market capitalisation on BSE. Shares of the Infosys extended losses on Monday and fell more than 3% as the pessimism continues to grow which led to the decline in market cap.
At current market price of Rs 886.6, the market capitalisation of Infosys stood at Rs 2,03,832.85 crore as compared from Rs 2,34,554.78 crore on Thursday at the closing price of Rs 1,021.15 on Bombay Stock Exchange. State-run oil explorer and marketing company ONGC has replaced Infosys to become the tenth most valuable company on BSE. On broader terms, Infosys has lost about 30,721.93 crores in just two days of trading from Friday.
The resignation of Vishal Sikka from the post of CEO on Friday marked a dent in India’s second largest information technology company. Soon after the news broke out, pessimism spilled at a breakneck speed amid the market participants on the back of which the stock of Infosys tumbled over 13% in the intraday trade. Last week, company’s chairman R Seshasayee said any of the things which are set in motion aren’t going to be stopped and the company has no interest in engaging in legal battle against founder Narayana Murthy.
Meanwhile, a day after the shocking episode of Vishal Sikka’s resignation from Infosys’ CEO post which gave a jolt to the market, Infosys on Saturday announced a Rs 13,000 crore share buyback. According to media reports, Infosys would buy back up to 11,30,43,478 crore shares aggregating up to 4.92 per cent of the paid-up equity capital via tender route at a price of Rs 1,150, as per a BSE filing by Infosys.
However, the slump of Rs 30,721.93 in the market capitalisation of Infosys is more than two times the size of the share repurchase which stood at Rs 13,000 crores.
Earlier on Friday last week, Infosys board of directors has accepted Vishal Sikka’s resignation and appointed U.B. Pravin Rao as interim CEO and managing director. Vishal Sikka was the first non-founder CEO of the Bangalore-based information technology company. He joined Infosys in 2014. The company said Vishal Sikka was made the executive vice-chairman and will continue to stay in that capacity until a new permanent CEO and managing director takes charge by March 31.
Vishal Sikka in his notice to the board said, he was leaving because of “a continuous stream of distractions and disruptions” that were hindering management of the company. 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”.