Infosys Falls on Confusion Over American Shares, Analyst Says
Bangalore, India, July 19 (Bloomberg) -- Infosys Technologies Ltd. American depository shares fell as much as 17 percent after an analyst suggested that investors were paying a stiff premium compared to its shares traded in India.
Infosys, which provides custom software development, saw its American shares fall 18 1/2 to 92 1/4 in late trading of 349,100, more than four times the three-month daily average. They earlier touched 91 3/8.
Bangalore, India-based Infosys's American shares had surged to a level that implied a market value almost double the value of the India-based shares, BancBoston Robertson Stephens analyst Steven Birer said. Some investors may have mistakenly believed each American share is equal to an India-based share, when in fact the ratio is 2-to-1, Birer said in a research note today.
''Potentially, some people felt that the ADS's were at a discount,'' said Birer, who has rated the company ''long-term attractive'' since April 6. ''That would be a fallacy, since there are two ADS's for every equity share in India.''
American depository shares are similar to the more common American depositary receipts, Birer said. Both give U.S. investors the opportunity to invest in foreign companies.
Infosys's American shares may deserve a slight premium, Birer said, because it's difficult for U.S. investors to buy and sell shares on the Indian stock exchange.
Infosys first sold American shares for $34 each on March 11.
Jul/19/1999 15:58
. |
