The Hindu Business Line : Indian IT stocks underperform on US bourses

New Delhi, Dec. 29 With the rupee rising sharply against the greenback, the American depository receipts (ADRs) of Indian IT heavyweights including Infosys, Wipro and Patni took a beating on US bourses during 2007, significantly underperforming the benchmark indices Nasdaq and NYSE.

Sharp fall

According to data compiled by KPMG, Infosys Technologies’ ADR tanked over 19 per cent on Nasdaq between January 3 and December 21, in sharp contrast to Nasdaq’s double-digit return of 10 per cent.

The ADR of NYSE-listed Wipro slid 8 per cent during the period, while that of software exporter Patni Computer Systems gave a negative 14 per cent return for investors on NYSE.

Satyam bucks trend

Satyam Computer Services, however, bucked the trend with its ADR yielding 11 per cent return during 2007, compared to NYSE’s single-digit return of 7 per cent.

“It is logical to assume that uncertainties related to a possible slowdown in the US and depreciation of the US dollar against all major currencies, especially against Indian rupee, has led to a significant under-performance by ADRs of Indian IT companies. Currency sensitivity has a significant impact on the competitiveness, profit margins and stock performance of Indian IT companies. During the last one year, the Indian currency has appreciated by 10 per cent against the US dollar,” Mr Pradeep Udhas, KPMG Head Markets (India), said.

BPOs: Mixed returns

Amongst the Indian Business Process Outsourcing (BPO) firms, WNS gave a negative return of 49 per cent, while ExlService Holdings and Genpact ended in positive gains for the investors.

At 9 per cent return, the EXL scrip performed almost in line with its benchmark index Nasdaq, even as Genpact, which got listed in August 2007, ended up 11 per cent higher by the yearend. While both EXL and WNS listed on US bourses in 2006, Genpact came out with its mega-IPO (initial public offering) of 35.3 million shares, priced at $14 per share, in August this year and raised close to $494 million.

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