Infosys shares rally post disclosure on whistleblower complaint

Infosys shares were flying on the bourses on Monday following a company disclosure days back that it had not received any evidence to corroborate allegations of "unethical practices" made against its two top officials in a whistleblower letter and said the matter was still being investigated. The scrip was trading 3.6 per cent up at Rs 713.10 at around 1.30 p.m. (IST), while the benchmark BSE Sensex was trading 84.90 points, or 0.21 per cent, up at 40,249.93.

"With respect to the anonymous complaints, there is no prima facie evidence that the company has received until date to corroborate any of the allegations made. In any event, the audit committee retained the services of the law firm, Shardul Amarchand Mangaldas & Co. to investigate the matter," Infosys said in a regulatory filing on November 2.

"Further, given the circumstances at this stage, where there is complete absence of prima facie evidence and the Anonymous Complaints are still under investigation, the Company is not in a position to determine the concreteness, credibility and materiality of the anonymous complaints. In light of the above, no disclosure under Regulation 30 of the LODR Regulations is required to be made.

"As requested, we will update the stock exchanges on the basis of key findings of the investigation reports once these are concluded," the company said in its clarification statement.

According to brokerage house Emkay, Infosys has reiterated that an internal enquiry by its Audit Committee along with external legal advisors Shardul Amarchand Mangaldas & Co is still on and the company would update investors/stock exchanges post the conclusion of the same.

This clarification is in response to the NSE seeking comments from Infosys on the subject. "The disclosure does not suggest that this concern is completely over. The company still continues with its internal enquiry. We believe that news flow related to this event will continue to drive near-term stock price movement for Infosys although after the recent correction, Infosys has become attractive for backing stock upsides given relative valuations with the caveat that any adverse outcome related to the internal enquiry in the form of any senior-level exit remains a near term risk," Emkay said, adding that it has kept a hold rating on Infosys.