The share price of IT firm Infosys which has been accused of indulging in 'unethical' practices by an anonymous employee group has risen 9.47% for the quarter ended September.
In a complaint letter to the board of Infosys and the US Securities and Exchange Commission (SEC) on July 20, the group has written an explosive letter alleging that the company asked them not to "fully recognise costs like visa costs" in last quarter to earn more profit. It added that when the auditor pointed it out, the issue was postponed by the company.
Infosys share price during the second quarter rose from Rs 731.95 on June 28, 2019 to Rs 801.3 on September 30 translating into a gain of 69.35 points or 9.47%. Interestingly, Infosys stock price during the first quarter of the current fiscal lost over 10 points. On March 29, the stock closed at Rs 742.93 compared to the close of Rs 731.95 on June 28.
The large cap share has risen 16.35% since the beginning of this year and gained 9% during the last one year.
The group said they were prevented from sharing data on large deals and important financial measures during board meetings. "CEO and CFO are asking us to show more profits in treasury by taking up risks and make a change to policies. This will provide short-term profits," the group alleged.
Meanwhile, Infosys in a statement said it's investigating the charges. "The whistleblower complaint has been placed before the Audit Committee as per the company's practice and will be dealt with in accordance with the company's whistleblowers' policy," the IT firm said.
In the second quarter of current fiscal, Infosys reported a 2.21 per cent decline in its consolidated net profit for the quarter ended September 30, 2019.
The IT major reported a net profit of Rs 4,019 crore during the quarter under review, as opposed to Rs 4,110 crore reported during the corresponding quarter last year. Infosys share price is likely to see a big slide when market opens on Tuesday.
Infosys share price which closed 0.18% or 1.35 points lower at Rs 767.75 on Friday is likely to see a 10-15% downside in the near term, according to Harit Shah, Research Analyst at Reliance Securities. "While we await developments on the board investigation, given the stock is so widely held, it is very likely that some investors will vote with their feet and sell at least some of their holdings," Shah said.
By Aseem Thapliyal