Infosys Ltd Stock Price today crashed 16% to ₹643.30 after India’s No.2 software services exporter said it is investigating whistleblower claims accusing its top two executives of “unethical practices” to boost short-term profit. Today’s crash wiped off ₹53,452 crore from its market capitalisation. Infosys Chairman Nandan Nilekani said in a statement on Tuesday that the complaints were placed before the audit committee and the non-executive members of the board.
CEO Salil Parekh and CFO Nilanjan Roy have been recused from the matter to ensure an independent investigation, said Nilekani, who is credited for growing Infosys’ annual revenue by four-fold to $2 billion during his 2002-2007 tenure as CEO.
The allegations could start a fresh storm at Infosys, which just two years ago endured a shake-up that saw its then CEO Vishal Sikka leave after a public battle with founders.
“Infosys is the blue-eyed boy as far as corporate governance is concerned… two complaints in two years could shake investor confidence, at least temporarily,” said Deepak Jasani, head of retail research at HDFC Securities.
The accusations come days after Infosys raised its full-year revenue guidance on upbeat client demand and said it signed $2.8 billion worth of large deals in the September quarter, helping margin grow by 120 basis points from the previous quarter.
Infosys, whose more than 1,300 clients include Intel Corp and Verizon Communications Inc, also reported a forecast-beating operating profit margin of 21.7%, or 100 basis points higher than analysts’ average estimate by Refinitiv.
Another of the complaints “largely deals with allegations relating to the CEO’s international travel to the U.S. and Mumbai,” Nilekani added.
The audit committee has retained law firm Shardul Amarchand Mangaldas to conduct an independent investigation, and the company’s board will take appropriate steps based on the outcome of the investigation, the company said.