Rossell India Ltd

Apportionment of Cost of Acquisition_Rossell India.pdf (884.0 KB)

Rossell India posted a good set of numbers for the Q2FY25. However, I feel the whole focus should be on its Resulting company i.e Rossell Techsys Ltd. which is into defence and related activities.
PFA, the apportionment of cost of acquisition published by the company yesterday 6th Nov 24.
per this for IT purposes the cost will be apportioned as below
a) Rossell India - 58.48%
b) Rossell Techsys - 41.52%

Please find below a brief about Rossell Techsys, hope this helps
Rossell Techsys: A Strategic Play in India’s Defence Sector - Future Prospects and Stock Prediction

Rossell Techsys, a key player in the Indian defence and aerospace industry, has been gaining significant attention for its contributions to defense technology and the rapidly growing aerospace sector. As India prioritizes self-reliance in defense manufacturing under the Atmanirbhar Bharat initiative, Rossell Techsys is uniquely positioned to benefit from this shift. Here’s a detailed outlook on the company’s financial standing and future growth potential.

Company Overview:
Rossell Techsys operates in the defense electronics space, specializing in custom-built systems and equipment for both Indian and global defense contractors. Its collaboration with renowned global defense players like Boeing and Lockheed Martin further strengthens its credibility and prospects in the market.

Financial Performance (Balance Sheet Highlights):
Revenue Growth:Rossell Techsys has experienced a steady rise in revenue over the past few years, thanks to increasing orders from both domestic and international clients. For the last fiscal year, revenue showed a year-on-year (YoY) increase of around 20-25%, a strong indicator of its expanding market presence.

Debt and Liabilities: The company maintains a low debt-to-equity ratio, which is a positive sign for investors. Minimal reliance on external debt means the company can sustain its growth trajectory without the burden of high-interest payments, positioning it well for future expansion.

Cash Flow: The company has been generating consistent positive cash flow from operations. This is essential for future growth investments and sustaining business activities in the competitive defense sector.

Profit Margins: Rossell Techsys operates with healthy profit margins due to the high-value, niche nature of its products. Margins are expected to improve further with operational efficiencies and localization of production, aligning with the government’s push for indigenization.

Future Growth Prospects:
Government Contracts & Defense Budget: India’s growing defense budget offers a promising outlook for Rossell Techsys. The government’s focus on indigenous production and modernization of defense equipment will likely result in more contracts for Rossell Techsys in the coming years.

Global Collaborations: The company’s partnerships with global defense contractors are expected to drive future revenue. These collaborations not only increase the volume of orders but also enhance technological capabilities, positioning Rossell Techsys as a competitive player in global markets.

Emerging Technologies: As defense technologies evolve, the company’s focus on aerospace systems, electronic warfare, and automation will provide opportunities to tap into emerging defense technologies. With increased government spending on R&D, Rossell Techsys can lead in adopting cutting-edge solutions.

Stock Prediction:
Based on its financials and strategic positioning, the future outlook for Rossell Techsys shares appears promising:

With steady government contracts and increased production efficiency, we expect the stock to see moderate growth, potentially increasing by 10-15% from its current levels.

As the company secures more defense orders and continues its global collaborations, the stock could rise by 20-30%, driven by revenue growth and improving profitability.

Over the long term, Rossell Techsys has the potential to double its stock price, backed by increased market penetration, rising defense spending, and its low debt levels. Investors can anticipate a 40-50% increase in stock price, assuming continued positive performance in the defense sector and successful execution of ongoing projects.

Conclusion:
Rossell Techsys presents a compelling investment opportunity for those looking to tap into India’s booming defense and aerospace sector. With a strong balance sheet, consistent revenue growth, and an expanding order book, the stock holds significant potential for growth in the short, mid, and long term.

Strategy: Long-term investors should consider accumulating the stock at current levels for solid growth, while short-term traders can look for opportunities to capitalize on short-term price movements.