Rosmerta Digital Services IPO Review: Should You Invest?

The Rosmerta Digital Services IPO offers a compelling opportunity to invest in a rapidly growing company that provides digitally enabled services and automotive components. A subsidiary of Rosmerta Technologies Limited (RTL), Rosmerta Digital is poised to capitalize on the booming digital transformation in the automotive industry. In this blog post, we will review the Rosmerta Digital Services IPO in detail, highlighting its strengths, risks, financial performance, and whether it’s worth investing.

Rosmerta Digital Services IPO Details

  • IPO Dates: November 18, 2024 – November 21, 2024
  • Price Band: ₹140 – ₹147 per share
  • Lot Size: 1,000 shares
  • Minimum Investment: ₹1,40,000
  • Issue Size: ₹206.33 crore
  • Listing Date: November 26, 2024
  • Face Value: ₹2 per share
  • Listing At: BSE SME
  • Market Maker Portion: 703,000 shares

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About Rosmerta Digital Services

Rosmerta Digital Services was founded in 2021 and specializes in digitally enabled services and automotive channel sales. Initially, the company focused on providing vehicle registration services to OEMs (original equipment manufacturers) and later expanded its portfolio to include other services like garage services, last-mile delivery, and sales of automotive components.

The company operates through two key segments:

  1. Digitally Enabled Services – These include vehicle registration, ownership transfers, state transport authority approvals, FAME subsidies, and other RTO-related services.
  2. Digitally Enabled Channel Sales – This segment focuses on the supply of automotive parts and accessories to retailers and garages.

Rosmerta has built a solid reputation in the market and has partnered with notable OEMs and vehicle sales companies like Cars24, Ola, Okinawa, and Royal Enfield.

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Strengths of Rosmerta Digital Services

  1. URJA Platform: Rosmerta operates an in-house platform called URJA, which optimizes workflows for service management. This platform enables efficient nationwide operations.
  2. Last Mile Delivery: The company offers last-mile services such as High-Security Registration Plates (HSRP) delivery to dealerships or directly to customer homes.
  3. Robust Distribution Network: The company claims to have around 150 active channel partners for distributing automotive components and accessories.
  4. Digital Services to Leading Brands: Rosmerta is providing essential services to major players in the automotive sector, including Cars24, Ola, Okinawa, and Royal Enfield.

Risks to Consider Before Investing

While Rosmerta Digital Services shows promise, there are several risks investors should be aware of:

  1. Geographical Revenue Dependence: A significant portion of Rosmerta’s revenue comes from Karnataka and Maharashtra. Any adverse economic or political conditions in these regions could impact the company’s business.
  2. Single Customer Dependency: A large share of Rosmerta’s revenue is dependent on a single customer. Loss or reduction in business from this customer could severely affect its financials.
  3. IT System Risks: The company relies heavily on its information technology systems for its services. Any disruption or breach could damage operations and reputation.
  4. Legal Challenges: The company is involved in some ongoing legal proceedings. Any adverse judgment could negatively affect its business prospects.
  5. Financial Instability: Rosmerta has faced negative cash flow in the past, and any recurrence could be detrimental to its growth.

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Rosmerta Digital Services Financial Performance

Below is an overview of Rosmerta’s financial performance over the last few years:

  • Revenue (₹ in Cr):
  • FY2022: ₹2.03
  • FY2023: ₹29.79
  • FY2024: ₹84.19
  • Total Assets (₹ in Cr):
  • FY2022: ₹5.57
  • FY2023: ₹19.37
  • FY2024: ₹37.48
  • Profit (₹ in Cr):
  • FY2022: -₹0.03
  • FY2023: ₹1.62
  • FY2024: ₹10.57

The company has shown impressive growth in revenue and profitability in the past year, with a substantial turnaround from a loss in FY2022 to a profit in FY2024.

Rosmerta Digital Services IPO Objectives

The funds raised through the Rosmerta Digital Services IPO will be used for the following purposes:

  1. Capital Expenditure: Purchase of office space in Mumbai.
  2. Expansion Plans: Setting up warehouses, workshops, and experience centers across India.
  3. IT Infrastructure: Investing in IT systems to support growth.
  4. Working Capital Requirements: To fund the company’s operational needs.
  5. Inorganic Growth: Acquisitions and strategic initiatives to expand the business.
  6. General Corporate Purposes.

Rosmerta Digital Services IPO Key Performance Indicators

  • Market Capitalization: ₹780.36 crore
  • Return on Equity (ROE): 0.36%
  • Return on Capital Employed (ROCE): 0.28%
  • Return on Net Worth (RoNW): 20.72%
  • Price-to-Book Value (P/BV): 8.09
  • PAT Margin: 16.08%

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Rosmerta Digital Services IPO Review

Rosmerta Digital Services is a rapidly growing company in the digital services and automotive sector. The company has shown solid growth in terms of revenue and profitability in recent years, and its operations are backed by a strong distribution network and an in-house platform.

However, there are a few concerns, such as geographical revenue dependence, customer concentration, and IT system risks. Despite these risks, the company has potential for growth and could be a good option for investors with a long-term perspective.

Should You Invest in Rosmerta Digital Services IPO?

Given the strong growth prospects of the automotive services sector and Rosmerta’s strategic partnerships, the IPO could be an attractive option for investors looking to diversify their portfolios. However, considering the risks associated with its dependency on key regions and customers, as well as ongoing legal challenges, investors should weigh these factors carefully before investing.

If you’re a long-term investor with a high-risk appetite, this IPO could offer solid growth potential, especially if Rosmerta continues to expand its digital services and distribution network.

Key IPO Information

  • IPO Dates: November 18 – November 21, 2024
  • Price Band: ₹140 to ₹147 per share
  • Lot Size: 1,000 shares
  • Issue Size: ₹206.33 crore
  • Listing Date: November 26, 2024

FAQs About Rosmerta Digital Services IPO

  1. What is Rosmerta Digital Services’ business?

    Rosmerta provides digitally enabled services and automotive parts sales. Their services include vehicle registration, ownership transfers, last-mile delivery, and automotive component distribution.

  2. When will the Rosmerta IPO be listed?

    The IPO is expected to be listed on November 26, 2024.

  3. What is the price band for the Rosmerta IPO?

    The price band for the IPO is ₹140 to ₹147 per share.

  4. What is the minimum investment required for the Rosmerta IPO?

    The minimum investment required is ₹1,40,000 for a lot size of 1,000 shares.

  5. Who is the registrar for the Rosmerta IPO?

    The registrar for the IPO is Link Intime India Private Ltd.

For further details or to apply for the IPO, you can visit the registrar’s website at Link Intime.

This review provides an in-depth look at the Rosmerta Digital Services IPO. Stay updated on future IPO opportunities and follow our blog for more insights.

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