Shares of artificial intelligence (AI) engineering services provider Coforge Ltd fell sharply in early trade on Wednesday after OP Bhatt resigned as chairman and non-executive independent director with immediate effect, following concerns raised by an internal audit over the company's board evaluation process. Veteran banker Mr Bhatt is former chairman of State Bank of India (SBI).
The stock dropped as much as 8.67%, or ₹169, to ₹1,780.10 on the Bombay Stock Exchange (BSE). On the National Stock Exchange (NSE), it fell to around ₹1,781 during intra-day trading. The decline came as the broader IT sector also remained under pressure, but Coforge was among the sharper losers.
Mr Bhatt's resignation follows an internal audit review conducted under the company's audit plan for the second quarter (Q2) of FY25-26. The review examined the process followed for the board evaluation exercise conducted in March-April 2026 and the resulting board evaluation report (BER), which was presented to the board under Mr Bhatt's guidance.
According
to Coforge's regulatory filing, the internal audit identified concerns about how the evaluation report was handled and presented to the board. "The review identified certain concerns in relation to the manner in which the BER had been dealt with and presented to the board, including that certain material information contained in or relating to the BER and the performance of the chairman had not been fully disclosed to the board when the BER was presented," the company said.
The board subsequently raised its concerns with Mr Bhatt and sought his explanation. "The chairman provided his response to the matters raised and the board was in the process of considering and evaluating his explanation and had not taken any final decision in relation to the matters raised with him. While the chairman stated that he had acted in good faith, the chairman tendered his resignation from the board with immediate effect on 8 September 2026."
In his resignation email, Mr Bhatt said he had considered the concerns raised with him, his response and the circumstances that followed before deciding to step down.
He said he had served as an independent director and chairman with a strong sense of responsibility and had sought to discharge his duties independently and in the interests of the company and its shareholders. "I believe that continuing on the Board while there remains a disagreement considering the characteristics of my good faith actions in the board evaluation process would not be conducive to the effective functioning of the board. The matters referred to above are the material reasons for my resignation, and I confirm that there are no other material reasons for my resignation."
Coforge said Mr Bhatt's resignation had been accepted with immediate effect and that he had ceased to be a member of the company's board committees.
Vivek Sharma To Serve as Interim Chairman
The Coforge board has designated Vivek Sharma, a non-executive independent director, as interim chairman until 31 January 2027.
Mr Bhatt, a veteran banker and former chairman of State Bank of India, will continue as an independent director of pharmaceutical company Wockhardt. He is a member of Wockhardt's audit, stakeholder relations and capital-raising committees.
The circumstances surrounding his departure prompted a sharp reaction in Coforge shares, although the company moved quickly to draw a line between the board-level issue and its financial and operating performance.
In a separate regulatory clarification, Coforge said the concerns related solely to the board evaluation exercise which is a regulatory requirement. The company specifically said the matter had no connection with its financial statements, financial reporting or any other financial matter.
Coforge also said the issue had no bearing on its operations, business performance or its near-, medium- or long-term guidance.
“The board and the management team continues to support the company in its business and operations as usual,” the company said, adding that it remained focused on executing its business and growth plans.
The clarification is significant for investors because the internal audit findings concern governance and the board evaluation process rather than accounting, financial reporting or operating performance.
The leadership change comes after a strong June quarter for Coforge. The IT services company reported a 63.7% year-on-year (y-o-y) increase in consolidated net profit to ₹519 crore for the quarter ended June 2026, compared with ₹317 crore a year earlier. On a sequential basis, however, profit declined 15% from ₹666.2 crore in the March quarter.
Revenue rose 49% y-o-y to ₹5,527 crore in the June quarter. The healthcare and insurance businesses were among the key contributors, while earnings before interest, taxes, depreciation and amortisation (EBITDA) margin stood at 20.3%, an improvement of 2.85 percentage points from a year earlier.
The resignation of Mr Bhatt therefore comes at a time when the company is reporting strong business growth, making its own clarification that the board evaluation matter does not affect operations or financial guidance, particularly relevant for investors.
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