All the queries put to rest at Infosys Press Conference: Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research - IT, Angel Broking):

"Infosys has in the recent past, in spate of a lot of media speculation which was put to rest through a conference. The centre point of the debate was the level of corporate governance and allocation of funds. Amongst the corporate governance issues included hefty severance package paid to former Infosys CFO, Rajiv Bansal. The board has denied allegations of any hush money being paid. He also clarified that only a part of the severance package was actually paid and the balance was held up after objections were raised. The Board of Infosys also confirmed that globally there was a practice of paying a high severance package. However, the Board has also admitted that the severance package was arbitrary and that was unlikely to repeat as requisite processes and checks were in place on the subject.

One of the points of contention; as was also pointed by some of the key founding members was the fairly large compensation paid to Vishal Sikka. There were concerns on the ratio of the CEO salary to the average Infosys salary as well as the substantial hike in a tepid year. Seshasayee has clarified that the compensation had a very large variable component (almost >70%) and had been approved by the board after due deliberation and after benchmarking with the peer group levels in various countries. It was also emphasized that Sikka's compensation continues to be very reasonable compared to many promoter CEOs in India and professional CEOs abroad.

On, the capital allocation front, both Seshasayee and Sikka have confirmed that the primary focus of the company continues to be growth and transformation and that will drive the decision to use up the cash pile in the books. Traditionally, Infosys has never been too aggressive on dividend payouts or buybacks as they were typical signs of a company not having enough investment and growth avenues.

To sum up the press conference, the board has given a clear message that the standards of governance and transparency will continue to be upheld at Infosys, admitting to certain lapses that have happened. We strongly believe that corporate governance is a cornerstone of any organisation and has been the key pillar for a stellar rise of the company, and hence we strongly believe that the company should continue to deliver industry lead performance, driven on ethical ground. We maintain our BUY recommendation on the stock with price target of INR 1249."

Shares of INFOSYS LTD. was last trading in BSE at Rs.1011.9 as compared to the previous close of Rs. 982.35. The total number of shares traded during the day was 374068 in over 13770 trades.

The stock hit an intraday high of Rs. 1014.8 and intraday low of 990. The net turnover during the day was Rs. 375603793.

Source : Equity Bulls

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