ADR / GDR Valuation for Indian Companies – Demystified! 18Aug2025
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Ever looked up an Indian company’s ADR listed in the US and wondered, “Wait, why is the price so different from what I saw on the NSE?”
If yes, you're not alone. ADRs (American Depositary Receipts) and GDRs (Global Depositary Receipts) often confuse investors—especially when the same company is trading at different prices in different markets.
In this post, let’s break down how ADRs and GDRs work for Indian companies, how they’re valued and why the numbers don’t always match what you see on Dalal Street.
If yes, you're not alone. ADRs (American Depositary Receipts) and GDRs (Global Depositary Receipts) often confuse investors—especially when the same company is trading at different prices in different markets.
In this post, let’s break down how ADRs and GDRs work for Indian companies, how they’re valued and why the numbers don’t always match what you see on Dalal Street.
NSE or National Stock Exchange of India Limited is a premier stock exchange in India, closely followed by BSE Limited.
1. Definition
What is an ADR?
ADR stands for American Depositary Receipt.
It’s a negotiable certificate issued by a US bank, representing shares of a foreign company (like an Indian company). ADRs are traded on US stock exchanges (like NYSE or NASDAQ) and they allow American investors to invest in foreign companies without dealing with foreign stock markets or currencies.
Think of an ADR as a "proxy" share that lets US investors own a piece of an Indian company, in dollars, via US markets.
ADR stands for American Depositary Receipt.
It’s a negotiable certificate issued by a US bank, representing shares of a foreign company (like an Indian company). ADRs are traded on US stock exchanges (like NYSE or NASDAQ) and they allow American investors to invest in foreign companies without dealing with foreign stock markets or currencies.
Think of an ADR as a "proxy" share that lets US investors own a piece of an Indian company, in dollars, via US markets.
What is a GDR?
GDR stands for Global Depositary Receipt.
It’s similar to an ADR, but can be issued and traded outside the US, typically in European or other global markets (like the London Stock Exchange or Luxembourg Exchange).
GDRs also represent shares of a foreign company and are used to attract international investors.
In short, GDRs are like ADRs—but more global in scope.
In short, GDRs are like ADRs—but more global in scope.
2. Snapshot on Indian ADRs and GDRs:
Section A: American Depositary Shares (ADR, also known as ADS or American Depositary Shares) of Indian listed companies are traded on the NYSE (their equity shares are traded on BSE/ NSE also).
Section A: American Depositary Shares (ADR, also known as ADS or American Depositary Shares) of Indian listed companies are traded on the NYSE (their equity shares are traded on BSE/ NSE also).
Indian listed companies that have ADRs are:
1. Infosys Ltd (Each ADS represents one underlying equity share)
2. Wipro Ltd
3. Dr Reddy’s Laboratories Ltd
4. HDFC Bank Ltd
5. ICICI Bank Ltd
Note 1: Tata Motors Ltd delisted its ADR in Jan2023.
Note 2: Yatra Online Inc is listed on NYSE. Yatra Online Ltd is listed on BSE and NSE in India. Yatra Online Inc is the ultimate parent company of Yatra Online Ltd. They are distinct listed entities and technically they are different companies.
Note 3: MakeMyTrip Ltd’s (Indian company) equity shares are listed on Nasdaq – but its shares are not listed in any stock exchange in India.
Infosys ADS: On March 11, 1999, Infosys listed on NASDAQ, becoming the first Indian company to do so. During fiscal 2013, Infosys delisted its ADSs from NASDAQ, and listed them in the New York Stock Exchange (NYSE), Euronext London and Euronext Paris.
During fiscal 2019, the Company voluntarily delisted from Euronext London and Paris due to low trading volume. Now, Infosys ADS is traded only on NYSE.
Section B: The Global Depositary Receipts (GDR) of Reliance Industries Ltd (RIL) are listed on Luxembourg Stock Exchange and are traded on the International Order Book (London Stock Exchange) and amongst qualified institutional investors on the over-the-counter (OTC) market in the US.
Reliance Industries Ltd’s GDR Programme: Outstanding RIL GDRs as on March 31, 2024 represent 16,18,17,216 equity shares constituting 2.39% of RIL’s paid-up equity share capital. Each GDR represents two underlying equity shares in the Company.
Section B: The Global Depositary Receipts (GDR) of Reliance Industries Ltd (RIL) are listed on Luxembourg Stock Exchange and are traded on the International Order Book (London Stock Exchange) and amongst qualified institutional investors on the over-the-counter (OTC) market in the US.
Reliance Industries Ltd’s GDR Programme: Outstanding RIL GDRs as on March 31, 2024 represent 16,18,17,216 equity shares constituting 2.39% of RIL’s paid-up equity share capital. Each GDR represents two underlying equity shares in the Company.
GDR is not a specific time-bound instrument and can be surrendered at any time and converted into the underlying equity shares in the Company.
3. Valuation of ADR
Scenario 1: Hypothetical example: Let us assume an Indian company named K1, listed on NSE / BSE, wants to list its equity shares in the US as ADR. It has 10 million equity shares outstanding.
Out of these, it wants to issue 50,000 ADRs from 100,000 underlying shares (meaning one ADS equals two underlying shares). There is no fresh issue; just a secondary offering.
How does the company source and value / price these 50,000 ADRs?
Step 1: Identify Shareholders Willing to Offer Shares: Promoters and / or strategic shareholders may offer their shares or other willing shareholders my offer them voluntarily for conversion into ADRs.
Step 2: Thus sourced, the shares are converted to ADRs and kept with a custodian bank in India on behalf a reputable depositary bank in the US.
Step 3: In the process, they will have to follow both the Indian and US regulations.
Step 4: Reputable depositary banks in the US, like, JP Morgan or Citi will solicit investors for the ADRs targeting institutional investors and HNIs.
Here's a simplified example to show how ADR valuation works when an Indian company lists its shares abroad without raising new capital. In this ADR programme, existing shares are made available for trading in US markets in the form of ADRs.
Summary table for ADR valuation:
Scenario 1: No fresh issue of equity shares (just a secondary listing):
Scenario 2: Now, let’s look at how things change when a company raises fresh capital through an ADR offering.
Scenario 2: Now, let’s look at how things change when a company raises fresh capital through an ADR offering.
Hypothetical example: Let us assume an Indian company named K2, listed on NSE / BSE, wants to list its equity shares in the US as ADR. It has 10 million equity shares outstanding.
It wants to raise new capital. It wants to issue 50,000 ADRs from 100,000 underlying shares (meaning one ADS equals two underlying shares). This is a fresh issue of 100,000 shares for raising new capital.
How does the company source and value these 50,000 ADRs?
Step 1: In the process, they will have to follow both the Indian and US regulations.
Step 2: Reputable depositary banks in the US, like, JP Morgan or Citi will solicit investors for the ADRs targeting institutional investors and HNIs.
Since this is a capital-raising offering, the Indian company should account for US market conditions.
US investors will demand a discount to account for:
Market risk
Illiquidity
Emerging market exposure
Small float (only 50,000 ADRs)
Governance and Forex concerns
Let us assume the discount for the above is 10 per cent.
It wants to raise new capital. It wants to issue 50,000 ADRs from 100,000 underlying shares (meaning one ADS equals two underlying shares). This is a fresh issue of 100,000 shares for raising new capital.
How does the company source and value these 50,000 ADRs?
Step 1: In the process, they will have to follow both the Indian and US regulations.
Step 2: Reputable depositary banks in the US, like, JP Morgan or Citi will solicit investors for the ADRs targeting institutional investors and HNIs.
Since this is a capital-raising offering, the Indian company should account for US market conditions.
US investors will demand a discount to account for:
Market risk
Illiquidity
Emerging market exposure
Small float (only 50,000 ADRs)
Governance and Forex concerns
Let us assume the discount for the above is 10 per cent.
In contrast to Scenario 1, here the company issues new shares to raise fresh capital overseas through an ADR offering. This results in share dilution, but also brings in funds -- useful for expansion, debt repayment or strategic investments.
Summary table for ADR valuation:
Scenario 2: Fresh issue of 100,000 shares
4. Risks and Considerations:
Currency Risk: ADR / GDR values can fluctuate due to changes in the USD INR exchange rate, affecting investor returns.
Market Sentiment: Prices abroad may not always reflect the company’s actual performance in India, especially during global volatility.
Regulatory Compliance: Companies issuing ADRs / GDRs must meet foreign regulations (like US SEC rules), which can be complex and costly.
Liquidity Differences: ADRs / GDRs may trade with lower volumes than their domestic shares, leading to wider spreads and potential price inefficiencies.
Delisting Risk: If trading volumes are too low or compliance lapses, the ADR / GDR can be delisted from the foreign exchange.
5. Quick Recap
ADRs and GDRs allow Indian companies to tap global investors. But only a few listed Indian companies have opted for this route.
ADR / GDR valuation is based on NSE / BSE share price, share-to-ADR ratio and currency exchange rate.
Fresh issues raise capital and dilute equity, while secondary listings do not.
Market factors (like liquidity, demand and investor sentiment) can cause ADR / GDR prices to differ from their theoretical value.
ADRs and GDRs allow Indian companies to tap global investors. But only a few listed Indian companies have opted for this route.
ADR / GDR valuation is based on NSE / BSE share price, share-to-ADR ratio and currency exchange rate.
Fresh issues raise capital and dilute equity, while secondary listings do not.
Market factors (like liquidity, demand and investor sentiment) can cause ADR / GDR prices to differ from their theoretical value.
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References:
Tweet thread 17Jan2025 on ADR / GDR
SEBI Framework for issue of Depository Receipts
Annual Reports of Infosys Ltd and Reliance Industries Ltd
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