Depository receipts attract premiums

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Depository receipts (DRs) of around 50 Indian companies are actively traded in the overseas market. Some DRs command a premium in the overseas market due to factors such as a lack of headroom for foreign investments in the home market. HDFC Bank is one such stock. The premium between its American DR (ADR) and domestic shares had shot up to over 20 per cent due after the FII investment limit in the home market hit the ceiling. Following regulatory approvals to increase FII the investment limit, the premium has narrowed to around 11 per cent. A look at the five companies that have the highest premiums on depository receipts: