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Indian ADRs substatially Outperforms NASDAQ

India's economy grew at 9.4 pct in the fiscal year ended March 2007, the fastest expansion in the last 18 years.The Indian economy is expected to grow by 8.5 percent in the fiscal year ending March 2008. It therefore makes sense to look at India from investment perspective. Indian ADRs ( American and global depositary receipts) provides one way of investing in India. We will look at the historical growth of Indian ADRs and try to draw some quick conclusions.

The following table lists the prices of American and global depositary receipts of Indian companies compares in the past three years. The Closing prices of ADRs have been taken.



Table 1 : Share Prices of Indian ADRs

Sl No. Company Sticker 1 Yr Ago 2 Yr Ago 3 Yr. Ago Sept 25, 2007
1 HDFC Bank Ltd HDB 56.87 49.7 31.37 102.94
2 ICICI Bank Ltd. IBN 28.06 25.37 13.17 51.21
3 iGATE Corp. IGTE 4.85 3.65 3.94 8.69
4 Morgan India Investment Fund IIF 39.88 38.18 19.75 49.8
5 Infosys Technologies Ltd. INFY 45.85 34.62 27.16 45.97
6 Mahanagar Tele MTE 6.51 6.16 6.2 7.96
7 Patni Computer PTI 18.75 NA NA 23.08
8 Dr. Reddy's RDY 15.82 8.87 8.27 16.15
9 Rediff.com REDF 14.78 12.98 7.51 17
10 Satyam SAY 19.09 14.11 11.0123.6
11 Sify Ltd. SIFY 8.9 4.73 5.57 8.06
12 WNS Ltd. WNS 27.9 NA NA 16.77
13 The India Fund Inc. IFN 41.73 33.6 19.09 51.85
14 Videsh Sanchar VSL 17.09 15.5 7.04 22
15 Tata Motors Ltd. TTM 17.72 11.23 NA 18.5
16 Syntel Inc. SYNT 22.55 17.24 14.06 40.81
17 Wipro Ltd. WIT 12.49 9.53 8.44 13.82

The purpose of this analysis is to find the rate of growth of the Indian ADRs as compared to the US market. The Following Table lists out the gain during the past 3 years of the US market verses the Indian ADRs.

Table 2 : Annualized Percentage Return of Indian ADRs Vs NASDAQ

Sl No. Company Sticker 1 Year Return 2 Year Annualized 3 Year Annualized
1 HDFC Bank Ltd HDB 81.01% 53.56% 76.05%
2 ICICI Bank Ltd. IBN 82.50% 50.93% 96.28%
3 iGATE Corp. IGTE 79.18% 69.04% 40.19%
4 Morgan India Investment Fund IIF 24.87% 15.22% 50.72%
5 Infosys Technologies Ltd. INFY 0.26% 16.39% 23.09%
6 Mahanagar Tele MTE 22.27% 14.61% 9.46%
7 Patni Computer PTI 23.09% NA NA
8 Dr. Reddy's RDY 2.09% 41.04% 31.76%
9 Rediff.com REDF 15.02% 15.49% 42.12%
10 Satyam SAY 23.62% 33.63% 38.12%
11 Sify Ltd. SIFY -9.44% 35.20% 14.90%
12 WNS Ltd. WNS -39.89% NA NA
13 The India Fund Inc. IFN 24.25% 27.16% 57.20%
14 Videsh Sanchar VSL 28.73% 20.97% 70.83%
15 Tata Motors Ltd. TTM 4.40% 32.37% NA
16 Syntel Inc. SYNT 80.98% 68.36% 63.42%
17 Wipro Ltd. WIT 10.65% 22.51% 21.25%
Average 26.68% 34.43% 45.38%
18 NASDAQ COMPOSITE ^IXIC 20.24% 13.20% 13.83%
19 Dow Jones Industrial Average IN ^DJI 19.56% 16.01% 12.03%


Some Conclusions

1. The growth of Indian ADRs outperforms the average US market by substantial margin in the last 3 years.
2. The difference in growth of the Indian ADRs and US market has narrowed in the last year.
3. The advantage of the Indian ADRs as compared to the average US market is on expected line because of the higher GDP growth of Indian in general and Indian companies in particular.

The inverstor will need to continue to explore Indian ADRs. We also will need to monitor Indian economy in general to take advantage of the global growth pattern.