Investor concern remains limited amid Coforge chairman's resignation

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Coforge chairman resignation

Highlights

Coforge chairman OP Bhatt resigned on September 9 after an internal audit found that information from the board evaluation report had not been shared.
Following the Encora deal, Advent and Warburg Pincus hold a combined 22% stake; Coforge shares fell 9% after Bhatt's resignation, but the market reaction remained restrained.
Limited impact on the core business, with a new permanent board chairman awaited; Coforge shares are trading at 25x price-to-earnings based on FY28 earnings.

This article was translated from the original. Read the original version by our correspondent here.

Board evaluation process and background to the resignation

According to Forbes India, the September 9 resignation of former SBI chairman Om Prakash Bhatt from mid-cap IT services company Coforge followed an internal audit reviewing how the board evaluation exercise was handled. In April 2026, KPMG assessed documents related to the FY26 annual board evaluation and the process of presenting them to the board and the Nomination and Remuneration Committee, alongside its review of "hire to retire" processes and the accuracy and completeness of board reporting for FY27.

According to the audit findings, the board evaluation report was available to chairman OP Bhatt and DK Singh, chair of Coforge's NRC, but was not shared with other board members on Bhatt's instructions. In its filing following the September 10 board meeting, Coforge said the findings of the board evaluation report were not fully communicated to other directors, even though the chairman category received the lowest rating in the report and the matter was not fully discussed by the NRC or the board.

Bhatt's term was put up for renewal at the August 24 annual general meeting, effective from May 2027, but the resolution fell short of the required 75% threshold. About 65% of shareholders voted in favour of his reappointment, while the rest opposed it, including Advent International. Bhatt submitted his resignation on September 8, and it was accepted with immediate effect. In his resignation letter, he said that remaining on the board would not be conducive to effective functioning if differences persisted over the nature of his good-faith actions in the board evaluation process.

For now, the board has appointed Vivek Sharma as interim chairperson until January 31, 2027. Sharma is the founder and CEO of InStride and has held senior leadership roles at Disney, Yahoo and McKinsey.

Shareholding structure and market impact

The company's shareholding structure is important for understanding these developments. Advent holds about a 20% stake in Coforge as part of the $2.35 billion acquisition of AI-native company Encora. Following the deal, Advent and Warburg Pincus together received around a 22% stake in Coforge's new shareholding structure, while institutional investors hold approximately 53%.

Despite this, the market reaction has so far appeared relatively restrained. On September 9, when news of Bhatt's resignation became public on the exchanges, Coforge shares fell about 9%, but over the following two trading sessions, signs of investor concern, panic or a significant loss of confidence remained limited. This suggests that the market views the matter as company-specific and manageable.

Motilal Oswal research analyst Abhishek Pathak says the impact on the core business appears limited for now, with more clarity awaited on the appointment of a new permanent chairman. According to him, strong deal wins, consistent execution, improved cash conversion and potential margin expansion from the Encora integration support the medium-term growth outlook.

Nuvama Institutional Equities analyst Vibhor Singhal also believes concerns over Bhatt's resignation are being overstated. According to him, the matter relates to disclosure and process-related questions rather than the overall functioning of the board; concerns about the influence of private equity investors such as Advent are also excessive. According to the source text, Coforge shares are available at a price-to-earnings multiple of 25x based on FY28 earnings.

The process through which NSE seeks explanations for unusual price and trading volume activity was covered in our previous report, which explained that following sharp volatility or certain news events, the exchange sends letters to several listed companies seeking factual confirmation and updated information. That coverage also highlighted that while some companies' responses become available in NSE corporate filings, pending clarifications in many cases can increase investor sentiment-driven volatility in shares.

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