DCX Systems IPO: GMP steady ahead of issue opening for subscription next week

The initial public offering (IPO) of DCX Systems, manufacturer of cables and wire harness assemblies, will open for public subscription next week on Monday, October 31, 2022. The price band has been fixed at ₹197- ₹207 per share and the three-day issue will close on Wednesday, November 2, 2022.

As per market observers, DCX Systems shares are commanding a strong premium (GMP) of ₹80 in the grey market today. The shares of the company are expected to list on stock exchanges BSE and NSE on Friday, November 11, 2022. 

“The company has delivered consistent financial performance. Their revenue from operations grew at a 56.64% CAGR between FY20-22. The company has a strong order book of Rs. 2563 crs as on June, 2022. At the upper band, the issue is priced at PE multiple of around 30x (Post fresh issue) based on FY22 metrics, which looks reasonable. Defense stocks have remained in flavour recently due to government initiatives to push indigenous manufacturing and exports of defense equipments," said Abhay Doshi, co-founder at UnlistedArena.

DCX Systems IPO consists of issuance of fresh equity shares worth ₹400 crore. Apart from the fresh issue, the promoters and shareholders of the company will sell shares worth ₹100 crore via an offer for sale (OFS). NCBG Holdings and VNG Technology are the promoters of the company.

DCX Systems Ltd, the Bengaluru-based company, is primarily engaged in system integration and manufacturing a comprehensive array of cables and wire harness assemblies, and are also involved in kitting. The company's orderbook has increased to ₹2,563 crore as of June 2022 as compared to ₹2,369 crore as of March 2022.

As of June 30, 2022, DCX Systems had 26 customers in Israel, the United States, Korea and India and its customers include domestic and international OEMs, private companies and public sector undertakings in India across different sectors, ranging from defence and aerospace to space ventures and railways.

The company proposes to utilise the net proceeds from the fresh issue towards repayment/prepayment of certain borrowings availed of by the company, funding working capital requirements, investment in its wholly owned Subsidiary, Raneal Advanced Systems Private Limited, to fund its capital expenditure expenses, and general corporate purposes.