DCX Systems makes strong debut, stock lists at 39% premium over issue price


DCX Systems (DCX) made a strong market debut, with its equity shares listed at Rs 287, a 39 per cent premium to its issue price of Rs 207 per share on the National Stock Exchange (NSE) on Friday.

The stock opened at Rs 286 on the BSE. Post listing, it moved higher to Rs 299, a 44 per cent premium over its issue price. At 10:02 AM, the stock traded at Rs 293 on the BSE.

DCX is among the leading Indian players for manufacturing electronic sub-systems and cable harnesses in terms of manufacturing capability. The company is primarily engaged in system integration and manufacturing a comprehensive array of cables and wire harness assemblies and is also involved in kitting.

The Rs 500 crore initial public offering (IPO) of DCX Systems had received a strong response with the issue subscribed up to 69.8 times. The institutional portion was subscribed to 84.32 times, the wealthy investor portion 43.97 times, and the retail portion by 61.77 times.

DCX plans to utilise the proceeds of the fresh issue for repayment of debts and funding its working capital requirements. It also plans to fund the capital expenditure expenses of its subsidiary Raneal Advanced Systems.

DCX is a preferred Indian offset partner for foreign OEMs for executing defence projects. It undertakes system integration & manufacture cable/wire harness assemblies for both domestic & international OEMs. DCX is one of the largest Indian Offset Partners (IOP) for the IAI Group, Israel, for the Indian defence market for electronic sub-systems and cable/wire harness assemblies. As of Q1FY23, the order book stood at Rs 2,600 crore (2.3xFY22 revenues) which is to be executed by FY25.

DCX has established a leadership position in the Indian aerospace and defence industry amongst other companies, in the segment of “system integration” business.

With defence public sector undertakings focusing on specialisation and integration and sub-component manufacture being outsourced to the private sector, there are significant opportunities for private sector companies like DCX Systems, analysts at ICICI Securities said in IPO note.

“DCX, being preferred IOP in the defence & aerospace space is well placed to capture the industry tailwinds. We like its focus on revenue/geography diversification, customer base expansion and inorganic growth which could keep the earnings growth strong. It is valued at 30.5xFY22 P/E which is reasonable compared to listed peers,” Motilal Oswal Financial Services had said in IPO note.


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