Coforge shares decline after chairman resigns; brokerage sees limited operational impact

Shares of Coforge Ltd fell sharply in Wednesday's early trade after the company's chairperson Om Prakash Bhatt resigned from the board. The stock slumped 8.67 per cent to hit a low of Rs 1,780.10 before recovering some of the losses. It was last seen trading 4.06 per cent lower at Rs 1,870.05.

In an exchange filing, Coforge said the matter was related to the board evaluation exercise conducted in March and April 2026 and did not relate to the company's financial statements, financial reporting or any financial matters.

The IT services company also said the matter had no bearing on its operations, business performance or its stated near-, medium- or long-term guidance.

According to Choice Institutional Equities, Coforge's internal auditor, as part of the Q2 FY26 internal audit plan, reviewed the Board Evaluation Exercise and the associated Board Evaluation Report (BER). The review identified process and disclosure gaps in the board evaluation framework, including disclosures related to the chairman's performance assessment.

The brokerage noted that certain material information contained in or relating to the BER was not fully disclosed to the board when it was presented. Bhatt, who had overseen the evaluation exercise, maintained that his actions were undertaken in good faith. However, he resigned on September 8 before the board completed its review of his explanation or reached a final conclusion.

In his resignation communication, Bhatt said continuing on the board amid differences over the evaluation process could impede its effective functioning.

Coforge has appointed Vivek Sharma, an existing non-executive independent director, as interim chairperson through January 31, 2027.

Choice Institutional Equities said it sees limited near-term impact on the company's operations or earnings, while noting that the resolution of the governance matter remains a key monitorable. It added that greater clarity on the identified gaps, corrective measures and strengthening of board processes could help address investor concerns.

The brokerage retained its 'BUY' rating on Coforge with a target price of Rs 2,050.

Gaurav Sharma, VP and Head of Research at Globe Capital, said the resignation of a chairman can create uncertainty among investors and remains a cause for concern.

"The good thing is that the stock has reversed sharply after hitting lows in the early session itself, which is a positive development. But yes, indeed, this is not a good sign when the chairman of a company resigns," Sharma told Business Today.