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    Infosys stock under pressure due to whistleblower complaint, say Morgan Stanley and Credit Suisse

    Infosys stock under pressure due to whistleblower complaint, say Morgan Stanley and Credit Suisse

    Infosys stock under pressure due to whistleblower complaint, say Morgan Stanley and Credit Suisse
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    By CNBC-TV18  IST (Updated)

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    Infosys executives have been accused of “unethical practices” to inflate its numbers by a group of its employees, and brokerages, including Morgan Stanley and Credit Suisse, have said that the complaint against the IT major puts the stock at risk.

    Infosys executives have been accused of “unethical practices” to inflate its numbers by a group of its employees, and brokerages, including Morgan Stanley and Credit Suisse, have said that the complaint against the IT major puts the stock at risk.
    On Monday, Infosys said it received whistleblower complaints alleging "unethical practices" by its executives CEO Salil Parekh and CFO Nilanjan Roy. Infosys issued a statement saying that the complaint has been forwarded to its audit committee as per the company’s practice and will be dealt with in accordance with the company’s whistleblower policy.
    Credit Suisse on Tuesday said that notwithstanding the truth behind the accusations, the whistleblower complaint brings uncertainty for Infosys.
    The brokerage said: “The nature of allegations and the fact that it comes from its own employees makes this a serious matter, in our view. If proven, this can lead to the CEO and CFO being fired with potential SEC investigations against them.
    “Even if these are not proven, this can kick-start a period of potential uncertainty amidst mgmt.
    Morgan Stanley said that the allegations put the Infosys stock under pressure and is a setback for the IT major.
    “The recent whistleblower news could put the stock under pressure. This comes as a setback for the company and could de-rate multiples until clarity emerges,” the brokerage said.'
    Meanwhile, Cantor Fitzgerald was neutral on the stock, basing its rating on the company’s strong past performances.
    “Our neutral rating is based on a lack of consistency in performance. We value INFY in line with the group noting growth rates have begun to reaccelerate recently, but it remains unclear  as  to  whether  the  company  has  made  the  transition  to  a  digital  player  from  a low-cost, offshore provider.
    “We will continue to monitor the co's
    Cantor Fitzgerald continued: “We maintain our neutral on INFY with a price target of $11, as we look for more consistency in performance.”
    Infosys stock, however, took a beating in Tuesday trading as it fell 16 percent.
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