Mumbai: Vishal Sikka’s resignation as MD (Managing Director) & CEO (Chief Executive Officer) of Infosys took a heavy toll on investors’ wealth as the IT giant’s market capitalization tanked by nearly Rs. 30,000 crore.
The cumulative investment of founder and former chairman of Infosys, Narayana Murthy’s family saw a decline of about Rs. 1,000 crore as Infosys shares took a beating. Murthy, his wife Sudha N Murthy, daughter Akshata Murthy and son Rohan Murthy together hold 3.44 per cent stake in Infosys.
The Infosys stock slipped over 13 per cent in intra day trade to touch its multi-year low of Rs. 884.20 in trade on August 18.
“The resignation of Sikka triggered by “the continuous stream of distractions and disruptions over the recent months and quarters” is very unfortunate. The market has signalled its displeasure with the stock tanking,” said V.K. Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
Earlier, the Infosys board, in an official statement blamed Narayana Murthy for Sikka’s resignation. An official communication released to the bourses by the Bengaluru-based Infosys’ board stated, “Murthy’s continuous assault, including this latest letter, is the primary reason that the CEO, Dr. Vishal Sikka, has resigned despite strong Board support.”
In an e-mail which was leaked to certain sections of the media, Murthy had claimed in a communication to some of his advisors that he was told by at least three independent directors at Infosys that Vishal Sikka was more chief technology officer (CTO) material than chief executive officer (CEO) material.
“Murthy’s letter contains factual inaccuracies, already-disproved rumors, and statements extracted out of context from his conversations with Board members,” Infosys said.
Murthy retorted by in an e-mail saying, “I am extremely anguished by the allegations, tone and tenor of the statement. I voluntarily left the board in 2014 and am not seeking any money, position for children or power. My concern primarily was the deteriorating standard of corporate governance which I have repeatedly brought to the notice of the Infosys board.”
Later in the day, Infosys said that the company will go forward with the share buyback plans that the IT firm had announced on August 16 and under which it could return as much as Rs. 13,000 crore to its shareholders.
“There is no change in buyback plans. We have made a commitment on how much and when to return cash to shareholders,” Infosys board Chairman R Seshasayee said at a conference.
Meanwhile, according to mutual fund research firm Morningstar, the market value of mutual fund holdings in Infosys stood at Rs. 21,094 crore in July compared with Rs. 16,376 crore in the same month last year.
“Infosys has been the favored stock from the tech space, with 40 per cent of the mutual fund industry’s overall technology sector allocations being made in the IT major,” said Kaustubh Belapurkar, Director Fund Research, Morningstar.
When the bourses closed for the day, the Infosys stock had plunged 9.57 per cent to end at Rs. 923.15 on the BSE. The broader market in comparison had slipped by almost a per cent.
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