The Bengaluru-based software major is the most liquid stock on the bourses, with institutional investors holding 57.72 per cent as on June 30, 2017. While Indian investors, who have 9.63 per cent in the company, saw market cap erosion, foreign institutional investors, who hold a 37.53 per cent stake in the company, saw a significantly negative impact on market cap ever since the public fallout last Friday.
The Infosys board and Murthy have drawn battle lines, each standing its own ground on their stand.
The controversy has hit investors’ sentiments and employee morale.
The company is yet to begin a hunt for the next CEO, which has to be completed before March next year, when Sikka, who now is the executive vice-chairman, will leave the company. Till then U B Pravin Rao would be the interim CEO.
While Infosys has accused Murthy of running a “misguided campaign", the 71-year-old founder says the board has failed in corporate disclosures, a point he first made last year after a huge severance pay was committed to former chief financial officer Rajiv Bansal.
The 18-month peace talks — in which Infosys yielded to several demands, appointing D N Prahlad on the board, elevating Ravi Venkatesan as co-chairman and committing to better disclosure norms — failed early this month. Murthy remained defiant and asked the company to make public the investigation report that looked into the acquisition of Israeli technology firm Panaya, and the board said no.
The Infosys founder’s call with analysts comes ahead of Infosys' attempt to meet clients and institutional investors to discuss the road ahead. R Seshasayee, chairman of Infosys, will join Sikka to meet clients and investors in the US and UK, while Venkatesan will reach out to investors in Singapore and Hong Kong.
Infosys is also reaching out to co-founder Nandan Nilekani to mediate and buy peace with Murthy. Venkatesan had met Nilekani to help negotiate with Murthy but has not seen progress, a source said. Nilekani did not respond to a request for comments. Apurva Prasad, IT analyst, HDFC Securities, said the institutional and other investors would look for a resolution to the whole issue and the business risks to reduce. “This move is primarily aimed to re-establish the credibility of the board. The board has not attempted to reach out to the investors in this way before. The company's CEO and COO have largely made presentations before the institutional investors. Now the board members are likely to join,” said Prasad.
While the investors seem to be aware of the current turmoil in the IT services sectors with automation and global uncertainties, the management issues at Infosys has only added to the growing business concerns. Most brokerages have downgraded the Infosys stock, pointing out that the current turmoil will disrupt the business and the company would not meet its forecast for the year ahead.
Former Infosys board member V Balakrishnan has said that any reasonable board could have sorted out such issues much faster than allowed it to linger, impacting business and shareholders’ value.