The IT services company appointed Vivek Sharma as interim chairman after an internal audit raised concerns over the disclosure of material information in the board evaluation process

Shares of Coforge plunged nearly 9 per cent in early trading on Wednesday after the company announced the immediate resignation of its chairman and non-executive independent director, OP Bhatt. The resignation followed concerns raised by an internal audit regarding the company’s Board Evaluation Exercise.

The development triggered heavy selling in the stock, which had been among the strongest performers in the IT sector in recent months. Coforge’s sharp decline also contributed to weakness across the broader information technology pack.

Coforge Shares Fall Sharply in Early Trade

Coforge shares declined 8.7 per cent to ₹1,781 on the NSE during intraday trading. At around 9:20 AM, the stock was trading nearly 7 per cent lower at ₹1,813.

Trading activity remained strong, with more than 17 lakh Coforge shares changing hands during the first five minutes of trade on the NSE.

The fall was significantly steeper than the broader market decline. The Nifty was down around 0.6 per cent, while the Nifty IT index declined approximately 3 per cent during early trading.

The sharp reaction came after Coforge disclosed that OP Bhatt had resigned with immediate effect. The company’s board subsequently appointed Vivek Sharma, a non-executive independent director, as interim chairperson until January 31, 2027.

Internal Audit Raises Concerns Over Board Evaluation

According to the company’s exchange filing, the internal auditor reviewed the Board Evaluation Exercise as part of the internal audit plan for the second quarter of FY26.

The review examined the process followed under the guidance of the chairman and the Board Evaluation Report presented to the board.

The audit identified concerns regarding the manner in which the evaluation report had been handled and presented. In particular, the company said certain material information contained in or relating to the report, including information concerning the chairman’s performance, had not been fully disclosed to the board when the report was presented.

The board subsequently communicated its concerns to OP Bhatt and sought an explanation from him.

The company clarified that Bhatt had provided a response and that the board was still evaluating his explanation. No final decision had been taken on the matters under review when he submitted his resignation.

OP Bhatt Resigns Amid Disagreement

In his resignation email, OP Bhatt stated that he had acted in good faith during the board evaluation process.

However, he said that continuing on the board while there remained a disagreement over the nature of his actions would not be conducive to the effective functioning of the board.

His resignation was accepted with immediate effect, bringing an abrupt end to his tenure as chairman.

Coforge has not indicated that the internal audit concerns relate to financial misstatement or operational performance. The issue, as disclosed by the company, relates to the board evaluation process and the disclosure of material information to the board.

Vivek Sharma Named Interim Chairman

Following Bhatt’s resignation, the board designated Vivek Sharma as interim chairperson. Sharma will hold the position until January 31, 2027, unless the company announces a change earlier.

The interim appointment is intended to ensure continuity in the company’s governance and oversight framework while the board addresses the issues raised during the internal review.

Investors are likely to closely monitor any further disclosures from Coforge regarding the board evaluation process, the scope of the internal audit and the company’s long-term leadership arrangements.

Coforge Had Been a Strong IT Sector Performer

The resignation comes after a strong rally in Coforge shares. As of September 8, the stock had gained nearly 75 per cent, significantly outperforming the Nifty IT index, which had risen by around 3 per cent during the same period.

The strong performance had been supported by the company’s growth outlook, robust demand in selected verticals and improving profitability. However, the latest governance-related development has raised concerns about investor confidence and the company’s leadership stability.

The sharp decline also reflects the market’s sensitivity to corporate governance issues, particularly in companies that have experienced significant share-price appreciation.

Coforge Reports Strong First-Quarter Profit Growth

Coforge reported a 63.7 per cent year-on-year increase in net profit to ₹519 crore for the quarter ended June 2026, compared with ₹317 crore in the corresponding quarter of the previous year.

However, net profit declined 15 per cent sequentially from ₹666.20 crore reported in the March 2026 quarter.

Revenue increased 49 per cent year-on-year to ₹5,527 crore in the June 2026 quarter. The growth was supported mainly by the company’s healthcare and insurance businesses.

The healthcare vertical grew 11.6 per cent, while the insurance business expanded 4.6 per cent.

Coforge’s EBITDA margin stood at 20.3 per cent, improving by 2.85 percentage points compared with the year-ago period. The improvement indicated better operating leverage and profitability despite the sequential decline in net profit.

Governance Concerns Overshadow Financial Performance

Coforge’s strong quarterly performance had provided support to its investment narrative, but the sudden resignation of its chairman has shifted the market’s focus towards corporate governance and board oversight.

The internal audit findings do not, based on the company’s disclosure, indicate any direct impact on revenue, profitability or client operations. Nevertheless, concerns over the transparency of the board evaluation process can affect investor sentiment, particularly when the matter involves the chairman himself.

The board’s next steps, including any further investigation, clarification or leadership decision, will be important for determining whether the issue remains limited to governance procedures or develops into a broader concern.

Market Outlook

Coforge shares are likely to remain volatile until the company provides greater clarity on the internal audit observations and the board’s evaluation of OP Bhatt’s response.

The stock’s sharp fall highlights the importance of corporate governance alongside earnings growth and business performance. Investors should closely track further exchange filings, management commentary and the company’s leadership transition.

From a technical perspective, the immediate focus will remain on whether the stock can stabilise after the sharp decline. A sustained recovery would require renewed confidence in the company’s governance framework, while continued selling could put further pressure on the stock and the broader IT sector.