Moshe Khatri, managing director, Cowen and Co says the next CEO should be a person who can boost morale and mobilize troops.
The more attrition we seen, more the pool of potential executives that could become the company's CEO gets shrunk. So the brand name is getting impacted
Moshe Khatri
Managing Director
Cowen & Co
Moshe Khatri, managing director, Cowen and Co believes IT behemoth Infosys is soon running out of internal candidates for the post of its chief executive officer (CEO).
Speaking to CNBC-TV18's Latha Venkatesh and Sonia Shenoy, Khatri says the next CEO should be a person who can boost morale and mobilize troops.
"BG Srinivas was seen as the next CEO for the company. Post his exit , the company now needs to announce the next CEO soon," he explains.
Before Srinivas, nine senior members including V Balakrishnan, Mohandas Pai and Ashok Vemuri had shocked the market by deciding to sever ties with the company after a fairly long spell.
The stock is likely to see a 3-4 percent fall today on this news, adds Khatri.
Below is the edited transcript of the interview.
Latha: Does this make you extremely despondent about Infosys?
A: Probably the word is anxiety. I think this is where the market is going right now. It was the 10th exit of a senior executive. From our perspective, I think the board needs to speed up its decision process, get its act together and I believe as soon as they come out with the candidate, at least some of the uncertainty will go away.
Whether it is going to be an internal candidate or external candidate, we will have to see where that goes but at this point clearly we are running out of the internal candidates that we are aware that could become the company's next CEO.
Latha: That is the point - the last sentence you said it looks like now the company is running out of internal candidates and it is more likely going to be external. So won't this impact earnings for two reasons, one Srinivas himself was the interface with clients and that usually leads to some bit of trimming away of money as well a new man takes time to get his fingers in, so equally for both reasons, would you see a profit and loss (P&L) impact?
A: Based on the conversation we had during results two-three months ago, management seems to be pretty active. The more attrition we seen, more the pool of potential executives that could become the company's CEO gets shrunk. So the brand name is getting impactedThe board needs to speed up the decision process.
Infosys stock price
On May 29, 2014, at 14:16 hrs Infosys was quoting at Rs 2948.00, down Rs 224.2, or 7.07 percent. The 52-week high of the share was Rs 3847.20 and the 52-week low was Rs 2315.75.
The company's trailing 12-month (TTM) EPS was at Rs 177.52 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 16.61. The latest book value of the company is Rs 733.03 per share. At current value, the price-to-book value of the company is 4.02.
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