InvestorQ : What is this ADS and is it true that Tata Motors is delisting its ADS from the NYSE?
vidhya Laxmi made post

What is this ADS and is it true that Tata Motors is delisting its ADS from the NYSE?

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sarah Leo answered.
2 weeks ago
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Let me start off with what exactly an ADS is all about. An American depository share (ADS) is a depository receipt issued by a depository bank against shares of a non-US company. Such ADS is listed in a global stock exchange like the NYSE or NASDAQ. Tata Motors deposited its shares with Citibank as the depository bank, which has in turn issued depository receipts against these shares. The ADS represents 5 shares each of Tata Motors and are freely tradeable on NYSE. It gives US investors access to buy Indian shares while Indian companies get the benefit of having an international listing and accessing the American investors.

In a recent filing with the NYSE, Tata Motors has expressed its intent to delist its ADS from the NYSE. The reason proffered is that the ADS trading volumes on the NYSE have been going down consistently and as a result the share of total ADS volumes as percentage of market cap had fallen drastically. This is a far cry from the situation in 2004 when the ADS of Tata Motors had first got listed on NYSE. At that point of time, Tata Motors was not such an internationally recognized brand. However, post the JLR acquisition and its expansion of European operations, it is now a global brand and the ADS listing does not add much value.

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