Infy surges 8% on Murthy's return; experts see challenges

NR Narayana Murthy's comeback got a stamp of approval from the market with the Infosys stock surging 8 percent higher in opening trade.

While most influential brokerages welcomed Murthy's return; most of them believe that the company's problems are deep and could take at least a year to turn around even if Murthy were to depart from the current strategy. Also read: What is Infosys 3.0 strategy? Thumbs up to Murthy's return The street has given NR Narayana Murthy's return as executive chairman a thumbs up.  But few brokerages see this as reason to up the target price for the stock with the exception of Credit Suisse (CS) and Merill Lynch. Both believe Murthy's return will boost investor confidence and employee morale reports Kritika Saxena of CNBC-TV18. Murthy back in business While Merill has upped its price target to Rs 2,850 from Rs 2,350; CS has revised it target price to Rs 2,700 from Rs 2,450. Morgan Stanley is more circumspect. It says, "While Murthy's comeback will improve execution, it could take about 6-8 months for the impact to be reflected in the results." Ankur Rudra, Analyst at Ambit Capital said, "The main positives are this change may lead to some improvement in its tactical area and strategic direction for the firm." Secondly, the return of a well respected founder will be a positive move for employee morale and investors than have been anguished due to its lack in performances." Infosys: Rohan Murthy logs in The other Murthy's induction though has caused some consternation. Some brokerages like Credit Suisse said, "Rohan Murthy's appointment may raise questions on Infosys' ability to look beyond its founders." It added that they see Rohan Murthy's appointment as executive assistant to the chairman as a comment on Infosys's ability to find a successor outside of the founders. UR Bhat, managing director of Dalton Cap Advisors said, "They always said that it is not a family-run business but now it does look… That sort of rhetoric may be confusing" Analysts believe Murthy's 'second innings' will be a lot more challenging. Murthy: A rocky road ahead Deutsche Bank says, "The company's problems are structural rather than mere quarterly stumbles." But they are hopeful that the company will be able to better navigate the uncertainty around US immigration issues under his watch.