This year 2018 is marked as a good year for Infosys. The stock has risen by about 40 % over the same period and narrowed discount with TCS. While at same time Narayan Murthy Chief Financial Officer (CFO) exit will impact the stocks and the loss is irreplaceable for Infosys.
Infosys has accepted the resignation of CFO MD Ranganath. In less than 5 years Infosys is braced for its 4th CFO. Ranganath will continue till November 16, 2018. Infosys has not announced a replacement, and the hunt for the new CFO will be commenced immediately.
According to the experts, stock price recovery was largely due to stability and strong management commentary but any instability may affect the belief of an investor.
Motilal Oswal said,”The string of exits at the senior level continues unabated at Infosys. This is disconcerting, compounded by the fact that the spike in attrition of the last quarter (20.6 percent) also saw high performers exit”.He added,“Infosys stock rallied by 38 % CYTD and 26% FTYD, leaving little room to absorb more instability. Hence we expect the stock to lose some of the built-up steam in the near future”.
The brokerage firm has a buy recommendation on the stock with a target of Rs 1,600.
Ranganath plays a crucial role in Infosys for been here in his long tenure of 18 years and has played several leadership roles in the areas of consulting, finance, strategy, risk management and M&A and has worked closely with the board and its committees in formulating and executing strategic priorities for the company.
Motilal Oswal reports, “Since his appointment as CFO, Infosys EBIT margins of 25 % in FY16 were down 70 bps to 24.3 %in FY18. The guidance is for EBIT margin of 22-24 % in FY19. This, however, was amid 4.7% / 2.7% decline in per-capita realization in FY16/FY17, which clawed back to +1.5% in FY18”.“Also, Cash generation remained strong – OCF margin in the last 3 years was 17.2 % OCF to EBITDA was 63 % FCF margin was 13%and FCF/PAT was 60%”
JP Morgan, the global brokerage firm said that company Infosys is struggling to keep its top management flock together.“Key exit at the top level is a disappointing development
Outsider vs Insider debate tends to get ignited”.