The American Depository Receipts of Wipro Ltd. and Infosys Ltd. were trading lower on Friday extending the decline after Tata Consultancy Services Ltd. posted its fourth quarter earnings on Thursday.
While the ADR of Wipro fell over 2% at $2.21, Infosys was trading over 1% lower at $13.49. This comes despite a recovery in Nasdaq on Friday.
The ADR is a tool for multinationals/foreign companies (primarily based outside the US) or organisations to trade on US stock markets, just like regular shares of US companies.
In theory, an ADR is similar to a special certificate issued by a US bank. It is a negotiable certificate representing shares in a foreign company traded on US stock exchanges.
According to Kranthi Bathini, director - equity strategy, WealthMills Securities Pvt., Indian IT sector has lost flavour. He further added that the IT firms have missed the flavour of AI, which is why foreign investors have sold Indian IT stocks, and are selling ADRs as well. And the slip in TCS' revenue is also a factor that is extending the sell-off.
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While the results were in line with analyst estimates, TCS reported its first ever decline in dollar revenue for a full financial year. In the last fiscal the company posted a 0.5% year-on-year decline in dollar revenue at $30,017 million, while in constant currency terms, revenue fell 2.4%. Even during the pandemic-affected FY21, TCS had managed a marginal growth of 0.6%. Notably, in four of the five financial years preceding FY26, the company had already been witnessing only single-digit growth.
On a sequential basis, TCS posted a 5.4% quarter-on-quarter rise in rupee revenue to Rs 70,698 crore, with constant currency growth at 1.2%. For the full year ended March 31, rupee revenue increased 4.6% year-on-year to Rs 2,67,021 crore, although it registered a 2.4% decline in constant currency terms.
While the ADRs fell on Friday, Infosys shares closed 2.94% lower at Rs 1,292.50 per share, while Wipro shares ended the session nearly 1% higher at Rs 204.88 apiece.
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