India's Infosys shares extend losses after CEO quit

  • India's Infosys shares extend losses after CEO quit

India's Infosys shares extend losses after CEO quit

The shares of Infosys tanked 5.37 per cent on Monday to close the session at Rs 873.50 on the BSE.

Vishal Sikka's surprise resignation as Infosys CEO on Friday threw markets off-track as the Sensex careened off 271 points. Mr. Sikka in 2014 became the main Infosys pioneer drawn from past the organization's seven founders, who have already served as the CEO's of the company for three decades.

Narayana Murthy, the co-founder of Infosys is set to address investors tomorrow, just three days after Vishal Sikka stepped down as the CEO of the company. In our view it is the Board which is saddled with eroded credibility, as it has defended Sikka against founders' allegations but has been unable to retain him.

The stock which closed with a market capitalisation of around Rs 2,29,285 crore on Thursday, tumbled up to 10 per cent, leading to a fall in its market capitalisation to Rs 2,12,262 crore on Friday.

Referring to a letter released by Murthy today, the board said it "takes great umbrage at the contents" and blamed the co-founder for a "misguided campaign" of misinformation against the firm.

Meanwhile, V Balakrishnan, the former CFO of Infosys said that the board has let down the investors.

"I can not carry out my job as CEO and continue to create value, while also constantly defending against unrelenting, baseless/malicious and increasingly personal attacks", Sikka wrote in a blog post.

The resignation follows a year-long public spat where the founders have raised a slew of concerns, right from Sikka's pay package to raising doubts over the company's Dollars 200-million Panaya acquisition. "The company's board on Saturday approved the share buyback plan of up to Rs 13,000 crore to reward shareholders".

U.B. Pravin Rao, Infosys' chief operating officer, was named interim managing director and CEO. "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. "Additionally, US equities closed off their session lows on Friday after Steve Bannon, one of President Donald Trump's top advisors, left the administration, further casting doubts over the current administrations abilities to bring about positive change", said Karthikraj Lakshmanan, senior fund manager, BNP Paribas MF. "But despite this, the attacks continue, and worse still, amplified by the very people from whom we all expected the most steadfast support in this great transformation".

"The Panaya report absolved the management of wrongdoings, and its basic conclusions were disseminated to the public".