Infy stocks bleed on back of Ranga's exit

Infy stocks bleed on back of Ranga's exit

MD Ranganath

India's second largest IT services company Infosys has lost Rs 10,079.74 crore in market capitalisation within two trading days post-resignation of its Chief Financial Officer M D Ranganath.

The stock had jumped 63.9%, from Rs 873.5 per share on August 21, 2017, when the news of the company's co-founder Nandan Nikekani stepping in to broker peace at the company broke, till Friday's close. However, since Friday's close of Rs 1,425.3 per share, the company lost Rs 47.05 per share (3.3%) to close at Rs 1,384.3 on Tuesday.

The company's market valuation on Tuesday's close stood at Rs 3,02,545.28 crore, down from Rs 3,12,625.03 crore on Friday.

Meanwhile, the analysts attribute the fall in share price to profit booking in the IT sector. "It is just an event that has triggered profit booking. After Vishal Sikka resigned last year, we saw how stocks behaved. That shows that institutions are bigger than people," Rahul Shah, Vice-president -Equity Advisory Group, Motilal Oswal Securities said.

He added that he is expecting IT stocks, including Infosys to perform far better in coming days, as the US dollar has gained lot of strength.

However, investors are shocked with the sudden exit of Ranganath. "We are shocked. Ranga was a competent CFO. We don't know what has happened there," one of the company's domestic institutional investors (DIIs) told DH.

Ranganath, according to head of a DII, was one of the key persons behind the shareholder value creation in the company. "He was the architect of capital allocation policy," the DII chief said.

According to the company's capital allocation policy, it pays out up to 70% of the free cash flow every year.

Meanwhile, Infosys has begun searching for the new CFO and three persons have emerged as top contenders.

According to sources, Deputy CFO Jayesh Sanghrajka, former iGATE CFO Sujit Sircar and outgoing Mindtree CFO Jaganathan Chakrabarthy are the main contenders for the CFO post.

"Sanghrajka will have an edge as he is an insider. And also he fits into the scheme of things of the current management," a source in the know said.

According to analysts, the new CFO would be hired internally mostly.

Sanghrajka became Executive Vice President and Deputy CFO in October 2016 and started his career in 2012 as VP and Corporate Fianncial Controller in 2012. Before that he worked with Rediff as Head of Fiance and Mu Sigma as VP Finance. The company declined to comment on the issue of new CFO.