Analysts cautiously welcome Murthy's return to Infosys
03 June 2013
Investors cheered the return of Infosys Ltd founder N R Narayana Murthy from retirement to again become executive chairman of the IT company, with the stock rallying by over 8 per cent in morning trade today to hit its psychological level of Rs2,600.
Brokerages tracking the stock felt that the return of Narayana Murthy would boost investors' confidence in the company.
Leaders of India's other IT companies, including industry body Nasscom, also welcomed his return to the helm after a gap of seven years.
Most analysts also agreed that Murthy's appointment is positive for the company, though, they cautioned that Infosys has to still do a lot of work before it can regain its bellwether position.
Goldman Sachs said it will wait and watch to see how Infosys changes its strategy to return to growth, given the general slowdown in IT growth and competitive pressures. ''We continue to believe that Infy's earnings visibility will remain poor in the near term as it faces growth/margin trade-off amid modest IT spending,'' it said.
Morgan Stanley maintains overweight rating on Infosys. Narayana Murthy's leadership is likely to improve execution at Infosys; but this could take six to nine months to be reflected in financials, it said.
Deutsche Bank said, ''Narayana Murthy's second innings at Infosys will likely be a lot more challenging, particularly since (a) he has been away from the executive responsibilities of the company for the last seven years and (b) the company's problems are structural rather than mere quarterly stumbles. Murthy's return will boost employee morale and investor sentiment in the short term.''