Technology No perceivable inconsistency in Infosys data points: ICICI Securities October 31, 2019October 31, 2019 ET Bureau A Mumbai-based brokerage firm said there is “no perceivable inconsistency” in key data points shared by InfosysNSE 2.29 % as alleged by anonymous whistleblowers in a recent letter. This report comes at a time when the USSEC has initiated an investigation. ET reported that a group calling themselves ‘ethical employees’ had filed a whistleblower statement with the Infosys board and the US Securities and Exchange Commission, stating the company is taking ‘unethical’ steps to boost short-term revenue and profits to boost its stock. The whistleblowers have alleged that the company was bending rules around large deals and revenue recognition to boost growth at the expense of margins and trying to prevent the recognition of visa costs in the quarter to improve profitability in the second quarter. ICICI Securities said in a report released on Tuesday that it did not find any irregularities since Infosys has always been clear that certain deals such as Verizon and Stater should be seen as ‘investments made to build relationships with strategic clients with an anticipation margins on these deals expected to remain dilutive to company average for long’. The brokerage firm has upgraded its rating on Infosys from hold to buy. “What has exacerbated investor’s response to the whistleblower allegations was the absence of proactive disclosures by the company,” said ICICI Securities in its report. It said the impact has also aggravated as allegations are not looked at in isolation but in the context of RanganathMavinakere former CFO and JayeshSanghrajka moving on from the company since Salil has taken over. “Looking at the allegations in isolation, some of the data points shared by Infosys, like Verizon deal being margin dilutive by 40 basis points or visa costs being a margin drag of 80 basis points in Q1 FY20 or Stater deal being dilutive by 40 basis points is consistent with the nature of these deals and investments in our opinion,” wrote KuldeepKoul and HardikSangani, IT sector analysts at ICICI Securities. According to the report, “net-new” deals are an important data point to consider, the importance of retaining renewals cannot be underestimated.