Rolta India slips 6%, cuts losses after Deutsche upgrade

MUMBAI: Shares of IT firm Rolta India today further declined by nearly 6 per cent, but then cut losses after Deutsche Bank raised its investment recommendation on software firm Rolta India bonds to buy from hold. A research report alleged irregularities in its financial, even as the company termed it as "malicious" attempt to pull down its stock price.

The stock ended in red, down 2.57 per cent at Rs 149.95.

Deutsche Bank has raised its investment recommendation on software firm Rolta India bonds to buy from hold a day after the company denied allegations made by short-seller Glaucus Research about fabricated capital expenditures.
Deutsche said it agreed with the company's response that Glaucus had made factual errors in its report and the report had very little new information.

"Issues such as persistent negative FCF (free cash flows) have been well known for a while, as the company was in the middle of a heavy capex cycle, which is now over, and in fact, it finally turned slightly free cash flow positive in the last quarter," Deutsche said.

A little-known US-based research firm Glaucus Research reportedly had said that Rolta India fabricated its reported capital expenditures in order to mask that it has materially overstated its EBITDA (Earnings before income tax, depreciation and amortisation).

Rolta India said it is exploring legal action against the research firm to protect its interests.

In a clarification to the BSE yesterday, Rolta India said, "This undated Glaucus Research Report is completely baseless and has factual errors and inconsistencies.

"The Glaucus Research Group has never contacted Rolta to verify any facts. This report is malafide, malicious and aimed at misleading investors with an ulterior motive - so that Glaucus Research Group can benefit from its short interest in Rolta's bonds."

The company is exploring all avenues including legal remedies to protect its interests, the filing had said.