Infosys ended the much awaited succession plan by announcing Vishal Sikka as the new CEO of the company effective Aug. 2014. Narayana Murthy and Gopalakrishnan would step down as the executive chairman and executive vice chairman respectively effective June 14, 2014. Shibulal would step down as the CEO of the company effective 31st July 2014.

Commenting on the management changes, HDFC Securities said, ''We believe that the appointment of the new CEO would remove the overhang on the stock. While there could be near term attrition, we believe that resumption in growth trajectory could enable moderation in attrition by as early as 4QFY15. Sikka is 47 year old and hence we see scope for long stint at Infosys. Pravin Rao has been elevated as COO effective June 2014.

We model 8.2/11.3% USD revenue growth for FY15/FY16E for Infosys. However, Infosys' growth in FY15 is likely to be much lower than peerset. We expect TCS/HCL Tech to deliver 15.5/14.2% USD revenue growth for FY15. 

Infosys is currently trading at 24% discount to TCS. We expect the stock to rerate owing to the appointment of the new CEO. We retain our target price at Rs 3,871/sh( 16.5 x FY16 EPS ). Maintain BUY.''

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