Infosys shares could open 2-4% more on Monday with the appointment of new CEO and MD Salil Parekh –

Infosys shares could open 2-4% more on Monday with the appointment of new CEO and MD Salil Parekh


Infosys that has underperformed the benchmarks for 2017 could see a gap open on Monday after the Board appointed Salil Parekh as its new CEO and CEO (CEO and MD) of the company as of January 2, 2018.

The stock that has given a fixed return in calendar year 2017 could see a gap-up of 2-4 percent when it resumes on Monday, experts suggest. The stock closed 1.6 percent lower at Rs 958.50. If the gap-up is maintained, the stock could be traded close to the Rs 1,000 mark.

After an instinctive reaction after the September quarter results, Infosys shares had recovered losses earning a little over 3 percent. India's second largest software exporter reported sequential growth of 7 percent to Rs 3,726 crore, but reduced its guidance for constant annual foreign currency revenue growth to 5.5-6.5 percent.

Infosys badured shareholders at the September quarter meeting that the process to identify the next CEO and the extension of the consultation with shareholders have begun and are progressing.

The new CEO, Parekh is no stranger to the world of IT services, not even to the process of finding a CEO on Infosys.

The Capgemini executive was also in the race for the highest position in Infosys the last time, when the Indian IT technician decided in favor of Vishal Sikka.

Vishal Sikka, the first non-cofounder CEO of Infosys, resigned the post in the month of August over disputes with founder NR Narayana Murthy on corporate governance issues.

"The CEO's new decision puts an end to the uncertainty at the top, is credited to being part of the team that changed Cap Gemini," said Dinesh Rohira, founder and CEO of to Moneycontrol.

"Nandan Nilekani and the new team will now lead the ship, the action should see a 3-4 percent rise on Monday, the cleanup process at Infosys comes to an end, laying the groundwork to focus entirely on the trajectory of business growth, "he said.

Uncertainty about the actions and the future of the company should decrease. Most IT names have been successful in the last year, but Infosys lagged behind. Most brokerages maintained their rating after the results of the September quarter, but some reduced their target prices.

CLSA and BofA-ML issued the most aggressive target price at 12 months for the share in Rs 1,325, which translates into an increase of almost 40 percent of current levels. The appointment of the new CEO in Infosys will eliminate the uncertainty and put the shares back on the investors' radar.

"With the appointment of the CEO, the uncertainty is over, most of the IT actions had been presented recently, but Infosys was lagging behind, but now with the clarity of the leadership, the actions should have a good performance" , Jimeet Modi, founder and CEO of Samco Securities told Moneycontrol.

"P / E for the IT industry is trading at 20 times the profit while Infosys is trading at 15x, a big discount, which will now be reduced, the designation is positive for the short and long term stocks" , He said.

AK Prabhakar, HoR, IDBI Capital told Moneycontrol that stocks could open up 2-3 percent after Parekh's appointment, but more upward will depend on Parekh's guidance.

Parekh joins Infosys from Capgemini, where he was a member of the Group's Board of Directors. Previously, he managed cloud infrastructure services in the Sogeti & Cloud Services division, as well as being Head of Asia-Pacific, North America and the United Kingdom in Capgemini SE.

"The appointment of Mr. Salil Parekh as MD and CEO is a welcome move.The action can react positively on Monday Mr. Parekh comes from Capgemini and has 30 years of solid experience," said Sanjeev Jain, Associate Vice President of Ashika Stock Broking.

"It has proven its worth in terms of business growth, so I think the Parekh union can be taken as a positive step by the company's board," he said.

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