Shares of Tata Consultancy Services (TCS) shed 0.3% in a firm market on Friday after the unexpected exit of chief executive officer, Rajesh Gopinathan, from the firm.
Analysts said investors are unlikely to be perturbed by the choice of Gopinathan’s successor, K Krithivasan — a TCS veteran— , a move that could ensure a smooth succession.
But, they expect the change to weigh on the stock in the near term. The TCS stock closed at Rs 3,175 on Friday. The Nifty gained 0.7% to close at 17,100. ET looks at what top brokerages are saying about the change of guard at India’s second-most valuable listed company.
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- While a surprise CEO change always adds a degree of uncertainty for a stable and well-performing company, it’s unlikely to be a source of significant concern for investors
- Change comes amid largely stable market conditions (technology cycle and competitive dynamics)
- Immediate backfill reduces uncertainty; succeeded by another TCS veteran; Tata Group chairman N Chandrasekaran’s high degree of familiarity with TCS
- Unexpected CEO change could bring volatility amongst weak macro and rebuilding competition
- (TCS) Has had the most stable leadership amongst peers with only 4 CEOs (all internal) during its history
- Expected to continue its strategy on large cost take-out deals under the new CEO
- Transition likely to be smooth; expect a minimal business impact from the change
- Succession planning could become a point of focus for long-term investors; Age of TCS’s senior leadership – Krithivasan-58 years old and N Ganapathy Subramaniam-63 years old
- Unexpected CEO departure could lead to periods of volatility amid weaker tech spend and rapidly evolving macro
- New CEO should keep strategies largely unchanged but has big shoes to fill after a period of rapid growth and signifi cant value creation
- TCS’s rich valuations in a weakening macro make a CEO change a likely derating driver
- Krithivasan in his late 50s; Another CEO change is likely in a few years
- Medium-term question of succession will loom large, but that is not an immediate issue
- Chandrasekaran could take a more active role in preparing another successor
- The Resignation comes as a surprise and may create a short-term overhang for the stock
- Expect the transition to be smooth and well-managed, as seen in the past
- Stock unlikely to underperform in coming months, going by past experience