Industry analysts say that resignation of Vishal Sikka is likely to drag the Infosys share down even further. Earlier today, Vishal Sikka, who had joined Infosys less than three years ago in 2014 from SAP, said that he is resigning from Infosys on the account of rising personal disruptions. Vishal Sikka said that 100s of hours were spent on tackling drumbeat of distraction, and that the attacks undermined the good work done by the company.
The shares were trading at Rs 951 in the morning trade on Friday, down by more than 6.5%. Edelweiss told ET Now that further correction may be in the offing for the Infosys stock. Nilesh Shah from Kotak Mutual Fund believes that current buyback will hopefully put a floor price to stock price in short term. Earlier, India’s second largest information technology services company Infosys Ltd has said it will consider a proposal for buyback of equity shares of the company at its board meeting on Saturday, 19 August. Analysts had told FE Online that the the buyback provides a good exit opportunity for the retail investors.
Nomura Asset Management told ET Now that the move to appoint UB Pravin Rao as Interim-MD is at best a stop-gap arrangement. Further, the brokerage house believes that Vishal Sikka resigning as CEO a is a negative for the company. The brokerage firm further said that it sees the executive exodus at Infosys continuing after Vishal Sikka’s resignation, with the employee attrition not expected to stop.
Another analyst on the condition of anonymity said that the position of Executive Vice Chairman will entail lesser powers that than MD & CEO and hence hence Vishal Sikka may not be too involved in the day-to-day running of the business.
The move is also seen also being read as a “tug of war” for power. Nilesh Shah told ET Now that Sikka’s resignation raises issue of relation between promoters and professionals. Industry insiders say that it raises a lot of questions surrounding corporate governance. The move comes at a time when India is still evolving and the segregation between promoter and the business needs a relook. In conversation with ET Now, Nilesh Shah from Kotak Mutual Fund said ,“Infosys is the ‘poster boy of Indian IT’; the leadership needs to get its house in order.” Harsh Goenka, the Chairman of RPG Enterprises says that Vishal Sikka is a top class global leader, and it’s unfortunate that he couldn’t align himself with the founders.
The ongoing tussle between Infosys founder N R Narayana Murthy and the board, which started sometime late last year, continued to turn murkier, with the veteran asking that the findings of the law firm Cyril Amarchand Mangaldas relating to corporate governance lapses be made public. Previously, the founders led by N R Narayana Murthy had raised issues pertaining to the quantum of salary hike given to Vishal Sikka and the size of the severance packages given to former CFO Rajiv Bansal and former General Counsel David Kennedy.
Troubles at Infosys Ltd, once India’s bellwether information technology services company, seemed to rise with senior executives making a beeline towards the exit door. The last one to leave in July was Anirban Dey, the global head and chief business officer of Edge products at Infosys’ wholly-owned unit EdgeVerve. Infosys has seen a steady exit of top level executives over the last one-two years. Earlier last month, Infosys’ $500-million Innovation Fund’s Managing Director Yusuf Bashir, and the company’s head of mergers and acquisitions Ritika Suri resigned the firm.