India-focussed ADRs to rally further: S&P

Global equity research firm Standard & Poor's has projected a significant jump in the American Depository Receipts of select Indian companies and share prices of US-based multinationals with significant India exposure despite the recent slump in the Indian stock market.

According to a recent S&P equity research report, Wipro and Satyam Computer, two Indian IT majors, are likely to see a jump of 33 per cent and 44 per cent respectively in their ADRs over the next one year.

Satyam and Wipro figure among the highly-ranked Indian companies that trade as ADRs in the US and the US-based MNCs with significant Indian operations, all of which are expected to show material stock price appreciation over the next 12 months, S&P said.

"We project that India's economy will grow at least seven per cent annually for the foreseable future... due to prosperous information technology, growth of consumerism and concurrent investment in infrastructure," the S&P report said.

S&P expects Satyam's ADR price to jump to $46, from $32 currently, while Wipro's price is likely to rise from $12 dollars to $16 in the next one year.

"The climate remains favourable for stocks of select outfits servicing geographies where strong growth is likely to continue, S&P said in a report.

Multinational companies with Indian operations such as IBM, FedEx, Accenture, United Parcel, AMR, Automated Data Processing and Electronic Data Systems are also expected to post a significant rise from their current price, S&P added.

The seven MNCs, along with Satyam and Wipro, figure in S&P's list of favoured companies with Indian operations.

On a cautious note, S&P said in a separate report released last week that while India-based outsourcers are the fastest-growing segment, their strong growth prospects are fully reflected in their share prices, which is up almost 35 per cent over the 18 months period ended April 30, with an exception of Satyam Computer.

The S&P's Equity Research Service said in its latest semi-annual report that Corporate America's acceptance of outsourcing non-core functions has benefitted many US and Indian companies, but the more attractive investment candidates are domiciled in the US.