Half the Infosys battle won, say analysts

The Street has taken the appointment of Nandan Nilekani as Infosys’ new nonexecutive chairman positively. Talk of Nilekani re-joining Infosys was doing the rounds and reflected on the stock, which closed 2 percent higher at ~912.50 on Friday on the BSE.

Nilekani’s appointment, experts said, was positive as it would help reduce uncertainties that had arisen due to the tussle between former board members and co-fou nd erNR Narayana Murthy. Nilekani, also a co-founder and former CEO, is seen as having strong understanding of Infosys and deep insights into the global IT services industry.

G Chokkalingam, founder and managing director, Equinomics Research and Advisory, said, “Nilekani joining the Infosys board is positive for the company in the nearterm as the move will pacify concerns that would have erupted if an outsider were appointed. Resolution of issues will be faster and will lead to a smoother transition as and when a new CEO joins.”

A K Prabhakar, head of research, IDBI Capital, said, “Finally, there is some positive news flow for Infosys with Nilekani’s joining leading to near-term benefits. He will be able to resolve the differences between the board and the founders.”

But that is only half the battle, say experts. The bigger challenge is to bring in a new CEO who will drive the business and turn the firm into a leader it once was. "With the sweeping changes that have taken place in Infosys' board, one can expect a cessation of hostilities between the founders and the board. However, Nilekani’s return is in a non-executive role and he needs to expedite the search for a CEO whose command over emerging technological trends equals that of Sikka,” said Ajay Bodke, CEO and chief portfolio manager, portfoliomanagement services, Prabhudas Lilladher.

The Infosys brand has suffered in the recent past due to the public tussle between some board members and Murthy. Nilekani has a tough job on hand of restoring confidence of stakeholders and getting the business on the fast track.

“The damage that has been afflicted on the brand can only be restored if the company introspects and makes genuine attempts to regain its place in the Indian corporate world,” Bodke said. A new CEO would hold the key to growth in new tech, which was necessary for the firm to get back to industry growth rates, Prabhakar added.