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Tech Mahindra zooms 10% on Infosys veteran’s appointment as CEO

Shares of IT major Tech Mahindra jumped nearly 10% to Rs 1,164.5 in Monday’s intraday trade on BSE after the company appointed Mohit Joshi as its managing director and CEO for a period of 5 years with effect from December 20, 2023. Joshi will replace CP Gurnani, who is set to retire in December.

Joshi resigned as president of Infosys after a 22-year stint at the country’s second-largest IT firm. He will be on leave and his last date with Infosys will be June 9, said Infosys. “The Board of Directors placed on record their deep sense of appreciation for the services rendered by Mohit Joshi and for his contributions to the company,” the company said in an exchange filing.

Experts said the move is positive for Mahindra Group firm both from a strategy and stock perspective.

“This is a big positive for Tech Mahindra and holds the potential to kick-start valuation rerating of the stock. Joshi will bring both revenue benefits and operational excellence for Tech Mahindra,” said Ruchi Burde Mukhija, vice president of equities research at Elara Capital. “Mohit may join the list of external candidates such as Sudhir Singh, Salil Parekh, Sanjay Jalona, and Sandeep Kalra who have brought in a significant turnaround to the current organisations.”

Pareekh Jain, founder of Pareekh Consulting, said, “What TechM needs is a strategy refresh. It has the lowest margins among tier-1 firms and also needs faster organic growth with large deals. Mohit’s experience in BFSI (banking, financial services and insurance, healthcare, Europe, and sales transformation will benefit Tech Mahindra as it is traditionally known for its strength mostly in telecom and communications.”

Experts also said that two top-level exits in less than six months – Ravi Kumar S in October 2022 and now Joshi – will not impact Infosys significantly or drive an exodus of trusted aides because of the company’s depth in senior leadership.

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At 9.45 am, the scrip was trading 8.6% higher at Rs 1,153 on BSE. On a year-to-date basis, the stock has surged over 14%, while it has declined over 23% in the past 12 months.”Market may react positively in anticipation of a strategy roll-out by the new CEO to revive the performance of TechM. However, we do not believe that the leadership change can materially change the earnings fundamentals of the company in the medium term (2-3 years), and reviving growth fundamentals is likely to be a gradual process,” said ICICI Securities.

The brokerage maintained its Reduce rating on Tech Mahindra with a target price of Rs 971 per share.

Joshi was responsible for financial services, healthcare, and life sciences businesses at Infosys. He also served as the chairman of Edgeverve Systems, the IT firm’s software and products arm that includes banking software Finacle.

He also handled the company’s internal technology and applications portfolio.
Joshi joined Infosys in 2000 and has since worked in different capacities for the firm. In his previous role, he was responsible for leading the financial services business in Europe. In 2007, he was appointed as CEO of Infosys Mexico and was instrumental in setting up the first subsidiary in Latin America.

This is the second top-level exit at Infosys since Ravi Kumar S resigned after working at the IT firm for almost 20 years. He has since taken over as the chief executive of Cognizant.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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