MOSL: INFOSYS (Under Review)-The biggest fears-key man risk plays out with CEO’s resignation-stabilization may take a while
​INFOSYS: The biggest fears; key man risk plays out with CEO’s resignation; stabilization may take a while
(INFO IN, Mkt Cap USD33.0b, CMP INR923, TP INR1050, 13% Upside, Under Review)
Resignation of Infosys’ (INFO) CEO owing to ‘continuous stream of distractions in recent quarters’ is a big dent to the company’s investment attractiveness.
Infosys’ Board announced the resignation of Dr Vishal Sikka as CEO of INFO with immediate effect, with COO U B Pravin Rao taking over the reins in the interim and efforts being made to search for Dr Sikka’s replacement. Dr Sikka has been appointed Executive Vice Chairman effective today, and will hold office until a permanent CEO & MD takes charge, the deadline for which is March 31, 2018.
We believe that it will be time before stability returns at the company, as the unsettling development poses the following key challenges:
#1: A call for changes to the Board?
At one end, the handling of matters related to corporate governance around the Panaya acquisition and the severance concerning Rajiv Bansal/David Kennedy have raised ire among founder investors. Consequently, there has been a call for a change in the Board’s composition.
On the other hand, the remaining minority investors have suffered from the unending saga. They would have hoped that the Board nips the problem at its bud before it balloons to the proportion beyond repair. However, this did not happen. Thus, albeit for different reasons, a collective call for a series of changes is an understandable possibility following today’s developments.
Infosys is a global technology services company based in India. Co. provides business consulting, technology, engineering and outsourcing services. Co.'s end-to-end business solutions include: Consulting and Systems Integration - consulting, enterprise solutions, systems integration and advanced technologies; Business IT Services - application development and maintenance, independent validation services, infrastructure management, engineering services comprising product engineering and life cycle solutions and business process management; and Products, business platforms and solutions, including Finacle™, which addresses core banking, mobile banking and e-banking needs of banks worldwide.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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