With Vishal Sikka at helm, Infosys stock may recover lost ground

The ending of the uncertainty of who would lead Infosys with the appointment of Vishal Sikka as the new Chief Executive Officer  is likely to boost market sentiments on the company's stock.

Brokerages say that the stock could have a reasonable upside with Barclays setting a target price of Rs 3,960 and Prabhudas Lilladher Rs 3,920. The stock closed at Rs 3,166.60 on Thursday (June 12) on the day, a fall of 0.38% over the previous day's close of Rs 3,178.75.

Since the beginning of the current financial year, the share price of Infosys has dropped 4.4% till June 12. During the same period, the BSE IT index declined marginally 0.5% to 8883.66 on June 12.

Along with the announcement of former SAP executive, Vishal Sikka, as CEO and managing director from August 1, 2014, the company also said founder NR Narayana Murthy, who returned from retirement to lead the company as executive chairman, will step down from June 14, 2014, and will be appointed chairman-emeritus.

The company also elevated UB Pravin Rao as chief operating officer. Sikka will be the first non-founding member to be CEO of the company established in 1981. Market experts see it as a positive step for Infosys.

Aniruddha Bhosale, research analyst, Deutsche Bank in a report says, "The appointment of Sikka is a positive development. Given his stature and experience with products and innovation at SAP, he will command the respect of Infosys' leadership team and employees. In addition, his strong client relationships can help Infosys win business with new and old customers and improve revenue growth."

Sarabjit Kour Nangra, VP Research, Angel Broking seconds Bhosale and says, "The entry of a new CEO, is much awaited news for Infosys, which has been searching for a CEO and has seen exodus of some key employees. Now with a new CEO, with proven credentials, we believe that the news is positive for the company's growth prospects. The share price of the company can touch Rs 3,640."

For the year ended March 2014, the company booked consolidated net profit of Rs 10,648 crore, up 13%, against Rs 9,421 crore in March 2013.

Daljeet Singh Kohli, head of research, IndiaNivesh Securities says, "This is a positive development for the company as there have been a series of senior level exits in recent times. Also better strategic execution coupled with strong new management running the company comforts us that we could soon see Infosys reporting growth in line with industry over the medium-to-long-term."