India's Coforge slides nearly 9% as chairman quits over board evaluation concerns
Indian IT firm Coforge’s shares fell as much as 8.7% on Wednesday, their biggest decline in more than a year, after Chairman Om Prakash Bhatt resigned after an internal audit raised concerns into a key review of the board’s performance. The company’s stock hit a three-week low of 1,780.70 rupees and was among the worst performers on the Nifty IT index, which was down about 3%. The audit found…
Indian IT firm Coforge experienced a significant drop in its stock price on Wednesday, with shares falling as much as 8.7%, marking the firm's largest decline in over a year. The downward trend began after Chairman Om Prakash Bhatt resigned amid concerns raised by an internal audit regarding a key review of the board's performance.
The company's stock reached a three-week low of 1,780.70 rupees, positioning it among the worst performers in the Nifty IT index, which also saw a decline of approximately 3% on the same day. The audit highlighted concerns over the disclosure and presentation of the board evaluation report, which evaluates the performance of the board and its members under Bhatt's guidance.
The company disclosed that material information related to Bhatt's performance had not been fully shared. Bhatt, a seasoned banker who previously chaired the State Bank of India from 2006 to 2011, has also held positions on the boards of major Indian companies such as Tata Steel and Hindustan Unilever. This event marks the first instance where a board evaluation report and a chairman's performance have been the focal point of a board-level dispute.
Shriram Subramanian, founder of InGovern Research Services, a proxy advisory firm, noted that this situation could be unprecedented, as board members, including private equity investors, questioned why certain findings on Bhatt's performance had not been communicated to them, potentially leading to a negative outcome. Consequently, the stock decline can be attributed to a "knee-jerk reaction," despite Coforge shares having rallied in recent quarters, with a 12.33% increase so far this year, compared to a 23.36% decline in the IT index.
The board was in the process of assessing Bhatt's response at the time of his resignation on September 8, according to the company's filing. While Bhatt stated he acted in good faith, the company has not yet released a final decision on the matter. In response to the incident, Coforge appointed independent director Vivek Sharma as interim chairman until January 31, 2027.
The company's shares were trading at 1,862.30 rupees as of 12:25 p.m. IST, reflecting a 4.5% decline compared to a 3.3% drop in the IT index.
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