Shares of IT services firm Coforge Ltd. experienced a sharp decline in early Wednesday trading following the resignation of its chairman, Om Prakash Bhatt. The stock initially fell by 8.67 percent to a low of Rs 1,780.10 before recovering some losses, eventually trading around 4.06 percent lower at Rs 1,870.05.
Bhatt's resignation, effective September 8, stemmed from disagreements regarding a board evaluation exercise conducted in March and April 2026. In an exchange filing, Coforge clarified that the matter was related to process and disclosure gaps identified in the board evaluation framework, specifically concerning the chairman's performance assessment. The company emphasized that the resignation was not connected to its financial statements, financial reporting, or any financial matters.
Coforge stated unequivocally that the issue has no bearing on its ongoing operations, business performance, or its stated near-, medium-, or long-term guidance. To ensure leadership continuity, the company has appointed Vivek Sharma, an existing non-executive independent director, as interim chairperson until January 31, 2027.
According to Choice Institutional Equities, an internal audit for Q2 FY26 revealed process and disclosure gaps in the board evaluation framework. While Bhatt maintained his actions were in good faith, he resigned before the board concluded its review of his explanation. The brokerage noted that certain material information related to the Board Evaluation Report (BER) was not fully disclosed to the board when presented.
Choice Institutional Equities projects a limited near-term impact on Coforge's operations or earnings, though they highlight the resolution of this governance matter as a key monitorable. The brokerage has retained its 'BUY' rating on Coforge with a target price of Rs 2,050, suggesting that greater clarity on the identified gaps and corrective measures could help alleviate investor concerns.
Gaurav Sharma, VP and Head of Research at Globe Capital, acknowledged that a chairman's resignation can create investor uncertainty. However, he noted the stock's significant recovery after hitting early lows as a positive development, despite the underlying concern.