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| Edited By: |Source: DNA |Updated: Aug 22, 2017, 07:55 AM IST
Infosys’s buyback announcement on Saturday at Rs 1,150 per share, nearly 25% premium over the Friday’s closing price, has failed to cheer investors. Ever since the acrimonious fight between the management and promoters claimed its high-profile CEO Vishal Sikka on Friday, India’s second-largest software services firm has seen a massive loss of Rs 34,000 crore in market capitalisation in two sessions.
A few challenges are staring at Infy’s in the face. Of course, finding a suitable replacement for Sikka is a tough job. The management, which went against its founders, now will have to seek a closure to all those vexing issues raised by them. In the absence of Sikka, who brought in several new $100-million clients to Infy, maintaining the business traction, especially in large accounts, will be the biggest challenge.
Is Infy in for a long-lasting business disruption? The ugly fight has led to a loss of face for the company while the charges of possible securities fraud could significantly dent its potential for acquiring new businesses in key markets. Infy’s rivals such as Accenture, TCS, HCL and Cognizant are likely to nibble into their long-held market share as potential clients shy away from inking deals with the company. Infosys generates a major portion of its revenue for the financial services segment (about 30%), followed by energy and communications (20%) and retail (15%). Some of the big clients will surely look at the rivals. However, of the 50 analysts tracking the stock on Bloomberg, 23 have in fact recommended a ‘buy’ rating and 17 have given a ‘hold’ rating. Only ten advised a 'sell'.
What is urgently needed is a global face for Infy who can take the company to the next level without compromising on corporate governance, and a team that can deliver quickly and prevent the stock from slipping down further.
