Shares of Tech Mahindra jumped over 8% on Monday as the company announced the appointment of a new Managing Director and CEO. However, the appointment did not impress analysts at ICICI Securities as the brokerage firm maintained its ‘reduce’ rating for the stock.
What Happened: The company on Saturday announced that Mohit Joshi will be joining the firm as the new MD and CEO from December 2023. Joshi will be leaving his post as President at Infosys to join the IT company. He will take over from the current CEO and MD CP Gurnani who is retiring on Dec. 19, 2023.
Joshi has already tendered his resignation at Infosys. In a regulatory filing, the company informed about his resignation and stated that he will be on leave from March 11, 2023, and his last date will be June 9.
The markets seem to have responded positively to the development. However, analysts at ICICI Securities opined that the appointment of an external CEO can lead to churn at the top management level which can hamper the company’s operations in the near term.
The brokerage firm noted that Joshi has good credentials but added that the appointment may have a minor impact on the company’s financials in the medium term. “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,” the brokerage firm said in its research note as it maintained its ‘reduce’ rating with a price target of ₹971.
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Price Action: Shares of Tech Mahindra were up 8.41% to trade at ₹1,150.35 as the markets opened on Monday. Infosys shares were down 0.96% to trade at ₹1,457.20.
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