A ‘kshatriya’-run Infosys continues to ring the bell despite Murthy’s attack
The rise in stock prices of Infosys, once the bellwether of the Indian software services industry, signal the Murthy’s diminishing grip over the company he founded with six others in 1981.Infosys Divide Updated: Feb 14, 2017 14:39 IST
Run by a kshatriya, a warrior – Vishal Sikka calls himself one – Infosys’ stocks continue to perform well despite allegation of “low corporate governance” by former chairman and co-founder NR Narayana Murthy.
The rise in stock prices of Infosys, once the bellwether of the Indian software services industry, signal the Murthy’s diminishing grip over the company he founded with six others in 1981.
Sikka, too, did not get bogged down. “I am a kshatriya warrior. I am here to stay and fight,” he said, in a television interview, after he and chairman R Seshasaaye addressed the reporter at the Taj Santacruz Hotel, in Mumbai, on Monday.
Infosys’ share price at the end of Wednesday, a day before the controversy broke out, was Rs 934. That is up by 5.5% to Rs 986 when this article was updated.
That is also because analysts and investors believe in Sikka’s vision of the company. On Monday he said that 5% to 10% of investors’ concern was about “corporate governance”. The larger issues were on macroeconomic factors such as H1-B visa and Infosys’ financial performance.
Infosys has fallen from the glory days, when it was the poster boy of the $140 billion IT industry. But not anymore. TCS, Wipro, Cognizant, and others have chipped off Infosys’ clients, and the company, which once enjoyed the highest gross margins, has struggled to keep those up.
Sikka is transforming the company towards areas of automation, internet of things, and analytics.
“Infosys deserves to get back its bellwether status. It is the only company that witnessed a revenue upgrade cycle in FY16, while most others have seen the reverse,” Nirmal Bang had written in its report last year.
True to that, Oppenheimer Funds, the third largest institutional investor in Infosys also supported Sikka’s way of running the company. “After many years of internal volatility and competitive underperformance, it is encouraging to see that Vishal (Sikka) has stabilised the core and articulated a clear — and appropriate — long-term strategy to help Infosys thrive amidst industry disruption,” the Fund said in an open letter.
It added that, the Board of Directors should “restrain divisions in the firm and contain inappropriate interventions by non-executive founders”.
Rather, it applauded Sikka for doing what he hired for, and asked the Board to appraise him on his efforts.
“There will always be differences in how an organisation can be run and this is expected all the more when founders are no more at the helm,” said Sanchit Vir Gogia, CEO and chief analyst at Greyhound Research. “
He further added, “there is misreporting about Vishal’s compensation; both the figure and structure are aligned to standard industry practices and not out of the ordinary.”
Meanwhile, the global IT business looks positive, which analysts said is another reason why Infosys continues to perform well on the bourses.