Infosys fight could drag on, say analysts
BENGALURU: The dust is far from settling on the governance concerns at Infosys raised by its founders, despite the technology services firm’s attempts to draw a line under the matter, say analysts. But they see the problem as more of a difference in perceptions between the management and founders, and don’t expect it to leave any lasting impact on the company.
In an interview last week, cofounder NR Narayana Murthy said corporate governance at the company had weakened and that the out-size severance pay handed out to its departing chief financial officer could raise doubts whether that was “hush money”.
The Infosys board held a press conference in Mumbai on Monday where it attempted to address the concerns and stated that there were “cultural differences” with the founders.
Few analysts believe that the matter has ended with it. “While Infosys’ board has tried to answer questions, we still don’t know if the founders will be satisfied. Murthy said yesterday (Monday) that there were still concerns, and the press conference didn’t say anything new if you look at it. I think this will drag on,” an analyst at a Mumbai-brokerage said. He declined to be named.
Four out of five analysts ET spoke to said they believed that the battle could drag on for a few more months. But few expect it to be long-term concern.
“Over the last week, we haven’t seen an impact on the stock. If the governance issues are simply a matter of perception on whether certain decisions should be taken, which it seems to be, then the street won’t care. But if it begins to have an operational impact on the company, then there will be a problem,” a second analyst at an Indian brokerage said.
Another analyst said he was less worried about the founders and far more concerned about the statements being made by Infosys’ former executives such as TV Mohandas Pai and V Balakrishnan.
In an interview last week, cofounder NR Narayana Murthy said corporate governance at the company had weakened and that the out-size severance pay handed out to its departing chief financial officer could raise doubts whether that was “hush money”.
The Infosys board held a press conference in Mumbai on Monday where it attempted to address the concerns and stated that there were “cultural differences” with the founders.
Few analysts believe that the matter has ended with it. “While Infosys’ board has tried to answer questions, we still don’t know if the founders will be satisfied. Murthy said yesterday (Monday) that there were still concerns, and the press conference didn’t say anything new if you look at it. I think this will drag on,” an analyst at a Mumbai-brokerage said. He declined to be named.
Four out of five analysts ET spoke to said they believed that the battle could drag on for a few more months. But few expect it to be long-term concern.
“Over the last week, we haven’t seen an impact on the stock. If the governance issues are simply a matter of perception on whether certain decisions should be taken, which it seems to be, then the street won’t care. But if it begins to have an operational impact on the company, then there will be a problem,” a second analyst at an Indian brokerage said.
Another analyst said he was less worried about the founders and far more concerned about the statements being made by Infosys’ former executives such as TV Mohandas Pai and V Balakrishnan.
