"DCX Systems IPO | Motilal Oswal"

DCX Systems IPO

Opening Date  31, October 2022
Closing Date 02, November 2022
Refund Initiation 09, November 2022
Listing Date 11, November 2022
Face Value ₹2 per equity share
IPO Price Band ₹197 to ₹207 per equity share
Minimum Order Quantity 72 Shares
Issue Size ₹500.00 Cr

 

The month of October 2022, saw a couple of IPOs getting listed in the secondary market. These were Electronics Mart India Ltd and Tracxn Technologies Ltd. Whereas Electronics Mart India Ltd proved to be a once in a lifetime opportunity, generating 43% listing gains, Tracxn Technologies also performed superbly, listing at 17% returns. The retail subscription for these IPOs saw an overwhelming response, describing that retail investors are eager to to invest. After Electronics Mart India Ltd, which received a whopping 20.77 times subscription from retail investors, all eyes are now aimed at DCX Systems, which is going live with its IPO on 31st October. Let’s learn in detail all its financials and if this IPO is worth investing in or not!

About the Company -

Incorporated in 2011, DCX Systems Ltd is amongst the leading Indian players for the manufacture of electronic subsystems and cable harnesses. The company is primarily engaged in system integration and manufacturing of a comprehensive array of cables and wire harness assemblies and is also involved in kitting. The company is rapidly growing in the Indian defense space  with  revenue from operations grown at a CAGR of 56.64% between Fiscal 2020 - 2022.

As of June 30, 2022, the Company holds 26 customers in Israel, United States, Korea and India. DCX System's key customers include Elta Systems Ltd, Israel Aerospace Industries Ltd - System Missiles and Space Division, Bharat Electronics Ltd, and Astra Rafael Comsys Private Ltd, Astra Microwave Products Ltd among others.

The financials of the company for the last three years are detailed as below - 

Particulars Three month period ended June 30, 2022  As of and for the Financial Year ended March 31
2022 2021 2020
Equity share capital 15 15 4 4
Networth 123 118 4.7 17
Total Borrowings 498 503 136 134
Revenue from Operations 213 1102 641 449
EBITDA 24 106 32 45
Profit / (Loss)  after Tax 6 66 30 10
Earnings per Share (₹ / share)(diluted) 0.7 9.2 4.2 1.4
Adj RoCE 3.80% 16.70% 16.30% 28.90%
RoE 4.50% 55.80% 63.20% 56.80%

DCX Systems details -

Let’s now move onto the main part of this article. Here, we’re going to be looking at some of the most important details of this upcoming IPO viz - DCX Systems date and its share price.

DCX Systems date -

According to the Red Herring Prospectus filed by the company, the public issue of the equity shares is going live from October 31 and will be available for subscription until November 2, 2022.

DCX Systems issue size -

The total issue size of the latest DCX Systems  is declared to be ₹500 crores. This is a mix of a fresh issue, and an offer for sale. The company is offloading shares worth ₹100 crores in OFS and is raising ₹400 crores via fresh issue.

75% of the offer is for QIBs (Qualified Institutional Buyers), 10% for retail investors, and the balance 15% for NIBs (Non-institutional Investors).

DCX Systems share price

The price band of the company’s upcoming IPO is declared to range between ₹197 to ₹207 per equity share

DCX Systems listing

Since the IPO of DCX Systems is from the mainboard, it would be listed on both - the National Stock Exchange (NSE) as well as the Bombay Stock Exchange (BSE)

DCX Systems objectives

The net proceeds of the Issue, i.e. gross proceeds of the Issue (“from Fresh Issue”) are proposed to be utilized in the following manner:

  • Repayment/ prepayment, in full or part, of certain borrowings availed of by the Company.
  • Funding working capital requirements
  • Investment in wholly owned Subsidiary, Raneal Advanced Systems Private Limited, to fund its capital expenditure expenses.
  • General Corporate Purposes.

DCX Systems Strengths

  • Amongst the preferred Indian Offset Partners for the defense and aerospace industry with global accreditations
  • Business model with visibility of cash flows & ability to mitigate operational and technology risk
  • As of June 30, 2022, Order-book comprised 42 orders worth ₹2,564 crores
  • Strategically located in aerospace SEZ with advanced & modern manufacturing facility
  • Military spending will be on rise given geopolitical tensions globally\

DCX Systems risks

  • Derives nearly 97% of revenue from Top three customer  in Q1FY23
  • Any changes in offset defense policy or a decline or reprioritisation of funding in the Indian defense budget
  • Significant shortages of, or delay in the supply of raw materials
  • Exposed to foreign currency fluctuation

Conclusion

If you wish to become a part of this exciting IPO opportunity, you will need to have an online demat and trading account, which will help you get shares of your favorite companies. To get an online DEMAT account for Free*, all you have to do is sign-up with Motilal Oswal and get started.

If you are an existing customer with Motilal Oswal, you can now invest in the IPOs in just one click through UPI payment!

It’s all easy. It’s all good.

 

Related articles: 5 Tips for Investing In IPOs | What's the big deal about IPOs | Clearing the confusion from IPOs | IPO in India- The future looks bright | Upcoming IPO

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