The Infosys scrip gained 3.14% to close at Rs 941.15 on the BSE on Monday, boosted by the return of founder Nandan Nilekani as the non-executive chairman even as brokerage houses saw the development as a sign of stability for the company.
The Infosys scrip gained 3.14% to close at Rs 941.15 on the BSE on Monday, boosted by the return of founder Nandan Nilekani as the non-executive chairman even as brokerage houses saw the development as a sign of stability for the company. Events preceding the entry of Nilekani had witnessed an ugly spat between founder group led by N R Narayana Murthy and the Board of Infosys, which resulted in the exit of CEO Vishal Sikka. The previous Board led by R Seshasayee had also released a very critical statement against Murthy. During this period, the Infosys had lost close to Rs 34,000 crore in market capitalisation in two days.
Brokerage house Jefferies in its note said, “This brings stability to the board, alleviates acrimony with the founders leading to CEO exit last week and eases concerns of potential CEO candidates, the next step in the repair.” Nilekani who took over as the non-executive chairman on August 24 signalled that he would be a consensus builder with top priority being the selection of the new CEO and put in place a new business strategy in place.
J M Financial in its note said the appointment of Nilekani provided the much needed respite in the ongoing promoter-board conflict. “This should help Infosys ease out of the public spotlight and let the executive management refocus on the business.”
According to Jefferies, stability of the board is a positive sign for the potential CEO candidates. Founder issues have effectively been laid to rest given that most of the “blamed” people are now out and the co-founder has taken charge. Client and employee retention should be better now, it said.
Infosys has already formed a core team to strategise the future course of growth. The new strategy will be unveiled in October. However, the key question will be on how long will Nilekani stay in the company.