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Infosys hunts for new CEO, SD Shibulal set to retire next year

Kritika Saxena, |

Updated: April 12, 2014, 8:46 AM IST
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Infosys hunts for new CEO, SD Shibulal set to retire next year
The present Infosys CEO, SD Shibulal, has reportedly announced his desire to retire earlier than expected.

Mumbai: As is tradition, Infosys will kickstart its earnings season next week with the tech major announcing its results on April 15. With the present CEO, SD Shibulal, announcing his desire to retire earlier than expected, it's not just the number that the street will be watching out this time.

SD Shibulal, the last remaining co-founders of Infosys, is in a hurry. Shibulal, fondly called Shibu, wants to retire from Infosys by January 2015, two months before his official retirement date of March 2015, or as soon as the company finds his successor. This news, coming on the heels of multiple top level exits at Infosys, has expectedly raised eyebrows, but board member and former chairman KV Kamath allays concerns.

"This is a planned exit. Shibulal is to retire in early March 2015, and the last board meet is a Jan board meeting. Nothing more should be read in that and I don't think this is anything else than what we have said in the press release. I think the new CEO process itself really takes less than six months or so," Kamath said.

The task of finding a new CEO has already begun with the nomination committee looking at both internal and external candidates.To assist in finding the right internal candidate, the panel has appointed Development Dimensions International, a company specialising in corporate executive evaluations and Egon Zehnder, an executive search firm, to assist in finding external candidates.

The question is as to who could be the chosen one. While names of external candidates doing the rounds are limited, industry watchers have long predicted that insiders like BG Srinivas and Pravin Rao may have an edge. If that happens, what would it mean for the stock?

"I really doubt if this particular news should have a negative impact on the share price. Shibulal was close to the retirement, Narayana Murthy was the Executive Chairman and very actively involved with operating the company," said Equirus Securities CEO Bhavin Shah.

For the stock, the main trigger will be the Q4 numbers. The street has already tempered its expectations after Narayan Murthy's cautious statements last month.

Dollar revenues are expected to remain flattish at $ 2102 m. Rupee revenues may see a 0.5 per cent fall but margins may see a marginal 11 basis point improvement owing to the cost optimization drive undergone by Infosys. It's the guidance, though, that is most awaited.

"The 6 to 8 per cent I think is where the street has pretty much settled. So I think there are analysts expecting guidance to be as low as 5 per cent for next year," said Macquarie Senior Analyst Nitin Mohta.

But given the recent events, Infosys first and foremost needs to define a clear growth pattern to woo back bearish analysts and investors.

First Published: April 12, 2014, 8:46 AM IST
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