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 concerns over the handling and presentation of the board evaluation report, which assesses the performance of the board and its members, prepared under Bhatt’s guidance, the company said in a filing. “Material information” relating to Bhatt’s performance had not been fully disclosed, Coforge said.

Bhatt, a veteran banker who chaired State Bank of India from 2006 to 2011, has also served on the boards of several major Indian companies, including Tata Steel and Hindustan Unilever.

This was “probably the first time” a board evaluation report and a chairman’s performance have become the centre of a board-level conflict, said Shriram Subramanian, founder of proxy advisory firm InGovern Research Services.

Board members, including representatives of private equity investors, questioned why certain findings on Bhatt’s performance had not been presented to them, which may not have “landed well”, resulting in the resignation, Subramanian said.

He described the stock decline as a “knee-jerk reaction”, noting that Coforge shares had rallied in recent quarters.

Shares have risen 12.33% so far this year, compared with a 23.36% decline in the IT index.

The board was evaluating Bhatt’s response and had not reached a final decision on the matter when he resigned on September 8, the company said in the filing, adding that Bhatt said he had acted in good faith.

Coforge did not immediately respond to a Reuters request for comment, while Bhatt could not be reached for comment.

For prospective clients evaluating IT service providers, the development could become a risk flag to discuss, said Pareekh Jain, founder of technology consulting firm EIIRTrend.

Coforge named independent director Vivek Sharma interim chairman until January 31, 2027.

The company’s shares were down 4.5% at 1,862.30 rupees as of 12:25 p.m. IST, compared with a 3.3% decline in the IT index.