Infosys gains after Murthy promises a turnaround in 3 years

Infosys shares gained in a choppy market, two days after the company's executive chairman N.R. Narayana Murthy said painful decisions needed to return the company to a "desirable" state in 36 months.

Infosys will "re-focus on building a more predictable earnings model," Mr Murthy said at the company's annual meeting, after shareholders accepted a proposal by the board to bring him back as executive chairman.

Shares in Infosys, India's second-largest software services provider, closed 1.1 per cent higher at Rs 2,421.45 outperforming the 0.75 per cent gain in the broader BSE IT benchmark. (Track stock)

Deven Choksey, managing director of KR Choksey told NDTV that it seems to be a "well carved out strategy for Infosys."

"Clearly the company wants to spend more on consulting part of their business for which they want to attract more revenues in their base maintenance vertical," Mr Choksey added.

Infosys will get more solid going forward though it might not be great for shareholders in the short run, he added.

Earnings' predictability had made Bangalore-based Infosys an investor darling and the $108-billion Indian IT industry's bellwether.

Over the last two years, however, the company has turned in a string of disappointing results as it struggled with a strategy to shift to higher value-added services by offering consultancy and software products and solutions.

Mr Murthy committed to spending more on the company's staff of more than 150,000, revitalising his salesforce with incentives, and in a rare public gesture, offered flexibility on pricing to win large contracts.

The 66-year old founder, who returned on June 1, had stepped down as CEO 11 years ago. He is the company's second-largest shareholder.

(With inputs from Reuters)