Shares of Rolta India fell over 12 per cent to hit intraday low of Rs 106.85 after international credit rating agency, Fitch revised its outlook on Rolta India's bonds to 'negative' and affirmed its 'BB-' rating.
Fitch Ratings in a statement said that it has revised the outlook on Rolta India for its long-term foreign- and local-currency issuer default ratings (IDRs) to 'negative' from 'stable', and affirmed the IDRs and senior unsecured rating at 'BB-'.
The negative outlook reflects that, due to higher working capital requirements, Rolta's leverage and free cash flow (FCF) will be worse than our previous expectations despite higher forecast of gross profit (EBITDA).
Meanwhile, on 16 April, California-based Glaucus Research, well known for shorting stocks, issued a "strong sell" report on software firm Rolta India, saying the company does not produce free cash flow and cannot repay offshore bondholders without refinancing.
In a rebuttal to the charges levied by Glaucus Research, Rolta India said that, the allegations in the report are baseless and have factual errors and inconsistencies. By Glaucus' own admission, its motive in issuing the report and rebuttal is to make financial gains by shorting the bonds.
As of 11:10 a.m., the shares of Rolta were down 10.85 per cent at Rs 108.45. The stock was underperforming the Nifty which was down 0.7 per cent.
(With inputs from Reuters)
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