Infosys Shares Sink Nearly 8pc on Srinivas’ Resignation

Infosys shares fell as much as 7.6 per cent in opening trade on Thursday after the IT major said on Wednesday that its president and board member BG Srinivas has resigned. Infosys was the top loser on the 50-share Nifty benchmark.
Mr. Srinivas, the 10th high-ranking official to quit Infosys in the last one year, was seen by some investors as a candidate to take over as CEO.
In April, Infosys started a search for new CEO after current chief executive SD Shibulal said he wanted to retire in January 2015 or before. With Mr. Srinivas’ exit, the possibility of an external candidate taking over as Infosys CEO has increased, analysts say.
“The fact that he has left the company indicates he was no longer in the running for the top job,” said Bhavin Shah, CEO of brokerage Equirus Capital. “He was a key person from a client interaction perspective, so it’s a big loss for the company.”
Market analyst Sanjeev Bhasin put out a sell call on Infosys with a target of Rs. 3,000. Maybank downgraded Infosys to sell (target 2,773) on Thursday citing “earnings risks as more top management walks out”.
Nomura said the management exits at Infosys are negative. The brokerage prefers HCL Tech, Tech Mahindra and TCS to Infosys. Barclays said the further churn within the company would likely weigh on the stock in the near term.
Market analyst Sanjeev Bhasin put out a sell call on Infosys with a target of Rs. 3,000.
Bank of America Merrill Lynch said Mr. Srinivas’ departure can negatively impact employee morale at Infosys. Australia-based Macquarie said the exit can weaken already dampened sentiments and constant churn at top level is a negative for the stock.
JP Morgan said Mr. Srinivas’ exit is a disappointing outcome and the road to recovery for Infosys has only got more protracted.
Infosys is grappling with high attrition levels as compared to its peers. In the quarter ended March 31, Infosys reported an attrition rate of 18.7 per cent, the highest level among its peers.