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No evidence from whistleblower reduces probability of lapse at Infosys: Urmil Shah, IDBI Capital

As more clarity emerges and there is certainty of no lapse, the Infosys stock would re-rate further, says Urmil Shah, Research Analyst and Vice President, IDBI Capital. Excerpts from an interview with ETNOW.

About two weeks ago, we had seen the Infosys stock price crack from Rs 730-740 levels to sub 660 and many brokerages said this is going to continue to be a key overhang if the whistleblower allegations are proved to be true. But the company claims that there is no evidence. What is your stance right now on Infosys?
In the last two weeks, the whistleblower seems to have not got back with the evidence for supporting their complaints or further investigation process. They ideally should have done that. We believe that this reduces the probability of any lapse on the front of the company. However, as the investigation process continues and at the company level as well as by the USSEC, there could be short-term volatility in the stock.

But I believe that no evidence being given by the whistleblower significantly reduces the probability of any lapse at the company level.

While Infosys has said that they have not found any evidence as such, how closely will you be watching out for any sort of other audits because they have said that Amarchand Mangaldas will still be continuing its probe and looking at every allegation very closely. Are you going to give that too much importance?
Yes, we will monitor it and as time goes, I think there will be more clarity on that front. Given that the last time when there was a difference between the founders as well as the company in 2017, the company would not want to have even a low probability of any lapse happening again.

Infosys continues to have very high standards of corporate governance and operational process. But we would monitor the investigations being done by Mangaldas and we would want to get clarity on that front. Today, the stock has got re-rated to the median. In the last three years, that has happened 16 times. As more clarity emerges and there is certainty of no lapse, the stock would re-rate further.
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