ADRs: Major Indian IT companies' ADRs listed on Wall Street slipped by nearly 3% each on March 20, despite Accenture reporting better-than-expected Q2 earnings. Also, the Ireland-based tech giant has raised its revenue guidance to 5-7%, beating market estimates. Despite the upbeat performance, why American Depositary Receipts (ADRs) of Indian large-caps fall sharply?
Infosys, Wipro ADRs:
Wipro ADR stood at $3, down by 2.3%, while Infosys ADR closed at $18.06, lower by 2.75%.
What are ADRs? Certificates issued by a US depository bank, representing foreign shares held by the bank, usually by a branch or correspondent in the country of issue. One ADR may represent a portion of a foreign share, one share or a bundle of shares of a foreign corporation. If the ADRs are "sponsored," the corporation provides financial information and other assistance to the bank and may subsidize the administration of the ADRs, as per Nasdaq.
On BSE and NSE, IT stocks such as Infosys, Wipro, TCS, HCL Tech, Tech Mahindra, LTIMindtree, LTTS, Persistent Systems and Coforge will be in focus due to Accenture's results. The hike in revenue guidance is a positive factor.
So Why Did Infosys, Wipro ADR Fell?
Accenture Results:
In the second quarter of 2025, Accenture posted revenues of $16.7 billion, an increase of 5% in U.S. dollars and 8.5% in local currency. While its operating margin stood at 13.5%, expanding by 50 basis points, however, was down by 20 basis points compared to the adjusted margin.
Moreover, GAAP net income for the quarter was $1.82 billion, compared with $1.71 billion for the second quarter of fiscal 2024. For the second quarter of fiscal 2024, adjusted net income was $1.80 billion, as per the filing.
Accenture Chair and CEO Julie Sweet said, "Our second quarter results demonstrate that we continue to deliver on our strategy to lead reinvention for our clients and return to strong growth in FY25, with broad-based growth across markets, industries, and the types of work our clients seek from us. The trust and confidence in our unique strengths and capabilities is reflected in 32 clients with quarterly bookings greater than $100 million and we are very pleased to have another milestone quarter in Gen AI with $1.4 billion in new bookings. Our continued growth is made possible by the extraordinary work of our more than 800,000 people around the world who focus on delivering value to our clients every day."
Accenture Full-Year Outlook:
Also, the company narrows its full-year revenue growth to 5% to 7% in local currency. Additionally, Accenture continues to expect a foreign exchange impact of approximately negative 0.5%. Also, it updated its operating margin from 15.6% to 15.7%, an expansion of 10 to 20 basis points over the adjusted operating margin. Accenture also expects diluted earnings per share to be in the range of $12.55 to $12.79.
So what impacted ADRs amidst upbeat earnings and outlook?
Firstly, Accenture's share price shed over 7.2% to close at $300.91 apiece on NYSE, after its earnings. This comes after Accenture revealed that US President Donald Trump's move to reduce federal spending have impacted their contracts. The reduction in federal funding resulted in the cancellation and delay of new contracts at Accenture.
Accenture's new bookings of $20.9 billion in Q2, declined by 3% in US dollar, while in local currency, it was muted. Further, Accenture's AI new bookings were at $1.4 billion.
In the revenue, the foreign-exchange impact for the quarter was approximately negative 3.0%, compared with the negative 2.5% assumption provided in the company's first-quarter earnings release.
About Accenture:
Accenture is a leading global professional services company that helps the world's leading businesses, governments and other organizations build their digital core, optimize their operations, accelerate revenue growth and enhance citizen services-creating tangible value at speed and scale. The company is a talent- and innovation-led company with approximately 801,000 people serving clients in more than 120 countries.
Click it and Unblock the Notifications
Sign in with Google