Narayana Murthy (NRN), Co-Founder Infosys assumed charge as Executive Chairman of Infosys assisted by his son Rohan Murthy, tweaking all the required amendments for the Infosys Rule Book. The Stock is up 7% in early trade and her si what various Research Analysts have to say about the return of NRN.
Mitali Ghosh and Kunal Tayal at BOFA-Merrill Lynch said,
We raise our rating on Infosys to Buy on the surprise return of Narayana Murthy as Executive Chairman, effective 1June 2013, for a period of 5 years. He had retired from Executive Chairman role in 2011 on attaining retirement age. The appointment of Narayana Murthy, founder of Infosys & one of the most respected corporate leaders of the Indian industry.
Morgan Stanley Analysts Gaurav Rateria and Vipin Khare said,
We maintain our OverWeight rating on Infosys. Mr. Murthy’s leadership is likely to improve execution at Infosys, but this could take 6-9 months to be reflected in reported financials, we think. This news could be a material driver for Infosys’s stock price in the near term
Deutsche Bank Analysts Pose Tough Questions,
We believe investors will react positively to the return of founder Mr. NRN as Executive Chairman of Infosys Ltd. The key question, though, is − how will customers in the US and Europe interpret this? Those hoping for a bolder move may be disappointed. In our view, Mr. Murthy’s ‘second inning’ 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
UBS Analyst Diviya Nagarajan said,
Given Mr Murthy’s strong views on profitability, we expect to see some changes to company strategy. We wonder if the management changes are a result of the company not seeing any results to the margin reset strategy witnessed in the last few quarters. We expect to see near term positive impact on the Infosys stock price, though the impact on fundamentals is yet unclear.
JP Morgan Analysts Viju K George and Amit Sharma said,
This is an implicit acknowledgment by Infosys that it does not have the requisite leadership to deal with today’s challenges. This will do much to raise the morale and confidence of Infosys employees – especially those in critical roles we term “value zones” which impact customer touch-points / perceptions
Kotak Analysts Kawaljeet Saluja, Shyam and Rohit said,
We upgrade Infosys to ADD from REDUCE, led mainly by a change in the INR/USD forecast. The upgrade does not signal a change in our stance on competition and profitability challenges Indian IT faces, but takes into cognizance lack of quality investible names in the Indian market. The induction of Mr Narayana Murthy in an executive role boosts management strength.
And if we are to take a call on NRN’s Return, it acknowledges the fact that NRN & Nilekani failed to Groom Second Line of Leadership before they retired and coming back in an era where computing is the most disruptive industry globally, NRN may not be able to do much given the size of Infosys and have to be content with modest turnaround. [Best Turnaround is something like Steve Jobs did @ Apple]