DCX Systems IPO | Review

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DCX Systems Limited has come up with an initial public offer (IPO). It will open on Oct 31-Nov 02, 2022 at Rs.197-207 a share. The IPO issue size is around Rs. 500 crore. The minimum bid will be for 72 shares and in its multiples thereafter.

Overview

DCX Systems Limited is among the leading Indian players for the manufacture of electronic sub-systems and cable harnesses in terms of manufacturing capability and revenue in the defence and aerospace sector. It is primarily engaged in system integration and manufacturing a comprehensive array of cables and wire harness assemblies and kitting. The company has commenced operations in 2011 and have been a preferred Indian Offset Partner (“IOP”) for foreign original equipment manufacturers (“OEMs”) for executing aerospace and defence manufacturing projects. It is a rapidly growing company in the Indian defence space and its revenue from operations have grown at a CAGR of 56.64%. Over the years, it has expanded manufacturing capabilities and grown its order book.

The company classify its operations under the following business verticals:- 1) System Integration, 2) Cable & Wire Harness Assemblies, 3) Kitting. In addition, it also undertake certain job work services that includes assembly and testing of materials that have been supplied directly by its customers.

Website – http://www.dcxindia.com/

Promoters

Dr. H.S. Raghavendra Rao – 9.56%	NCBG Holdings Inc – 44.32%
VNG Technology Pvt Ltd – 44.32%

Promoter Holding

Pre-Issue Shareholding – 98.20%

Post-Issue Shareholding – 73.58%

Strength & Weakness

Strengths	Weaknesses
Preferred Indian Offset Partner	Dependent on Key customers
Technology enabled and scalable end-to-end capabilities	Revenue depends significantly on offset defense contracts
Business model with visibility of cash flows	Foreign currency fluctuation risk
Ability to mitigate operational and technology risk	Negative cash flows in the past
Advanced and modern manufacturing facility	Significant competitive industry
Well-positioned to capitalize on industry tailwinds	High debt equity ratio
Consistent financial performance	Past entered into related party transactions
Experienced and qualified Promoters	Subject to strict quality requirements

Products

Electronic Sub-systems

Cable Harnesses

Customers

Elta Systems Limited	Israel Aerospace Industries Limited
Alpha Design Technologies Pvt Ltd	Astra Microwave Products
Kalyani Rafael Advanced Systems	SFO Technologies Private Limited
DCX-Chol Enterprises Inc

Competitors

Bharat Electronics	Data Patterns	Paras Defense
Astra Microwave	Centum Electronics

Company Financials

Year	Revenue (in Crore)	Profit (in Crore)
31-Mar-2020	449.3	9.74
31-Mar-2021	641.2	29.56
31-Mar-2022	1,102	65.61

Object of Issue

1) Repayment/ prepayment, in full or part, of certain borrowings availed of by our Company

2) Funding working capital requirements of our Company

3) Investment in our wholly owned Subsidiary, Raneal Advanced Systems Private Limited, to fund its capital expenditure expenses

4) General corporate purposes.

DCX Systems IPO Lot Size

Application	Lot	Shares	Amount
Retail (Min)	1	72	Rs.14,904
Retail (Max)	13	936	Rs.1,93,752
S-HNI (Min)	14	1,008	Rs.2,08,656
B-HNI (Max)	67	4,896	Rs.10,13,472

DCX Systems IPO details

IPO Opening Date	October 31, 2022
IPO Closing Date	November 2, 2022
Face Value	Rs.2 per Equity Share
IPO Price	Rs. 197-207 per share
Market Lot	72 shares
Minimum Order Quantity	72 shares
Listing At	NSE, BSE
Issue Size	Up to Rs. 500 Crore
QIB Shares Offered	75% of the offer
Retail Shares Offered	15% of the offer
NII/HNI Shares Offered	10% of the offer

DCX Systems IPO Timetable

IPO Date	Oct 31- Nov 2, 2022
Allotment Date	November 7, 2022
Initiation of Refunds	November 9, 2022
Credit of share to Demat a/c	November 10, 2022
IPO Listing Date	November 11, 2022