DCX Systems Limited IPO Review: DCX Systems Limited is coming up with its Initial Public Offering. The IPO will open for subscription on October 31st, 2022, and close on November 2nd, 2022. It is looking to raise Rs. 500 Crores out of which Rs. 400 Crores will be a fresh issue and the rest Rs. 100 Crores will be an offer for sale.
In this article, we will look at the DCX Systems IPO Review 2022 and analyze its strengths and weaknesses. Keep reading to find out!
DCX Systems IPO Review – About The Company
DCX Systems Limited is among the leading Indian players in the manufacture of electronic sub-systems and cable harnesses in terms of manufacturing capability and revenue in Fiscal 2021.
The company is primarily engaged in system integration and manufacturing of a comprehensive array of cables and wire harness assemblies. In addition to that, it is also involved in kitting.
Some of the customers of the company include names like Bharat Electronics Limited, Alpha Design Technologies Private Limited, Alpha Elsec Defence and Aerospace Systems Private Limited, and Centum Adeno India Private Limited.
The business verticals of the company include:
System Integration: The company provides product assembly and system integration services for various complexities to address customers’ requirements. They also provide product repair support.
Cable and Wire Harness Assemblies: They manufacture a comprehensive array of cables and wire harnesses assemblies such as radio frequency cables, co-axial, mixed-signal, power, and data cables for a variety of uses including communication systems, sensors, surveillance systems, missile systems, military armored vehicles, and other electronic warfare systems for the aerospace and defense industries.
Kitting: The company supplies assembly-ready kits of electronic and electro-mechanical parts and undertakes all aspects of procurement including sourcing components from suppliers.
The competitors of the company are:
- Data Patterns Private Limited
- Astra Microwave Products Limited
- Centum Electronics Limited
- Bharat Electronics Limited
- Paras Defence and Space Technologies Limited
DCX Systems IPO Review – Financial Highlights
(Source: DRHP of the company)
DCX Systems IPO Review – Industry Overview
The defense manufacturing industry in India is an integral segment of the country’s economy. To date, India has been among the top importers of defense equipment. However, the massive focus on ‘Make in India’ is set to change this.
Recent initiatives like an increase in foreign direct investment (“FDI”) in the Indian defense sector from the current 49% to 74% under the automatic route are anticipated to be key drivers and growth opportunities for the market.
The Indian aerospace and defense sector is poised to attain a value of USD 70 billion by 2030. While the Indian Defence segment plans to achieve a turnover of ₹ 1.75 trillion and exports worth ₹ 35,000 million are aimed by the year 2025.
Strengths of the Company
- The company is one of the preferred Indian Offset Partners for the defense and aerospace industry with global accreditations.
- The company has a Strategically located advanced and modern manufacturing facility at the Hi-Tech Defence and Aerospace Park SEZ in Bengaluru, Karnataka.
- It has established strong relationships with its existing customers over the years and is also looking to penetrate into new geographies.
- The company is well-positioned in the industry with consistently good performance over the years.
- The company is led by Experienced and qualified Promoters and a senior management team.
Weaknesses of the Company
- A significant portion of their revenue from operations is generated from the offset defense contracts. Any changes can affect the business.
- It is highly dependent on the performance of the electronic subsystems market. Any changes in the conditions can adversely impact their business.
- The company is exposed to risks such as foreign currency fluctuations.
- The company operates in a highly competitive market with factors such as rapid technological change, the development of new end products, their rapid obsolescence, and evolving industry standards.
- The company has high debt on its balance sheet and thus a high debt-to-equity ratio.
DCX Systems IPO Review- Grey Market Information
The shares of DCX Systems traded at a premium of 38.65% in the grey market on October 27th, 2022. The shares tarded at Rs 287. This gives it a premium of Rs 80 per share over the cap price of Rs 207.
DCX Systems IPO Review- Key IPO Information
Promoters: Dr. H.S. Raghavendra Rao, Ncbg Holdings Inc., and Vng Technology Private Limited
Book Running Lead Managers: Edelweiss Financial Services Limited, Axis Capital Limited, and Saffron Capital Advisors Private Limited
Registrar To The Offer: Link Intime India Private Limited
| Particulars | Details |
|---|---|
| IPO Size | ₹ 500 Cr |
| Fresh Issue | ₹ 400 Cr |
| Offer for Sale (OFS) | ₹ 100 Cr |
| Opening date | October 31, 2022 |
| Closing date | November 2, 2022 |
| Face Value | ₹ 2 per share |
| Price Band | ₹ 197 to ₹ 207 per share |
| Lot Size | 72 Shares |
| Minimum Lot Size | 1 (72 shares) |
| Maximum Lot Size | 13 (936 shares) |
| Listing Date | November 11, 2022 |
The Objective of the Issue
The Net Proceeds from the Fresh Issue are proposed to be utilized for:
- Repayment/ prepayment, in full or part, of certain borrowings availed of by the Company.
- Funding working capital requirements.
- Investment in their wholly-owned Subsidiary, Raneal Advanced Systems Private Limited, to fund its capital expenditure expenses.
- General corporate purposes
In Closing
In this article, we looked at the details of DCX Systems Limited IPO Review 2022. Analysts remain divided on the IPO and its potential gains. This is a good opportunity for investors to look into the company and analyze its strengths and weaknesses. That’s it for this post.
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