Coforge Shares Tumble as Chairman OP Bhatt Resigns Over Board Evaluation Concerns

Shares of IT services firm Coforge fell sharply in Wednesday's trade after the company announced that its chairman, OP Bhatt, had resigned from the board with immediate effect, days after an internal audit review flagged concerns over how a board evaluation exercise conducted under his guidance had been handled. The stock tumbled close to 9 per cent in intraday deals, marking one of its sharpest single-day declines of the year and wiping out a significant chunk of investor wealth in a company that has otherwise been among the steadier performers in India's IT services space.

What the audit found

According to the company's disclosures, an internal auditor reviewing the second-quarter audit plan examined the process followed for the board evaluation exercise, an annual governance requirement in which board members assess the performance of the chairman, individual directors and the board as a whole. The review raised concerns about how the resulting evaluation report had subsequently been handled, specifically flagging that certain material information relating to the report, and to Bhatt's own performance as assessed within it, had not been fully disclosed to the rest of the board. The company's statement did not go into granular detail about the exact nature of the undisclosed information, but characterised the lapse as serious enough to warrant board-level scrutiny.

Bhatt's response

In his resignation letter, Bhatt pushed back on the characterisation of his conduct, saying he believed continuing on the board amid a disagreement over the "good faith" nature of his actions during the evaluation process would not serve the board's effective functioning. He framed his exit as a step taken to avoid prolonged friction at the top of the company rather than as an acknowledgment of wrongdoing. Bhatt, a veteran banker who previously headed the State Bank of India, had been a prominent name on Coforge's board and was widely seen as lending institutional credibility to its governance framework.

Leadership transition

To ensure continuity, Coforge's board moved quickly to name Vivek Sharma, a non-executive independent director, as interim chairperson, with the appointment slated to run until the end of January 2027 or until a permanent successor is identified, whichever comes first. The company has indicated that the search for a long-term chairman will proceed in parallel, and has sought to reassure investors that day-to-day operations and client engagements remain unaffected by the boardroom development.

Market and investor reaction

The scale of the stock's decline reflects how sensitive markets have become to governance red flags at Indian companies, particularly in a sector where investor confidence rests heavily on management credibility and transparency. Analysts covering the stock noted that while the underlying business fundamentals at Coforge have not changed, an abrupt chairman exit tied to an unresolved disclosure dispute tends to inject uncertainty that markets typically price in swiftly and sharply. Several brokerages said they would be watching closely for any further disclosures from the company, including whether the audit findings prompt additional governance reviews or regulatory queries, before revising their outlook on the stock.

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