The three-day initial public offering (IPO) of DCX Systems, manufacturer of cables and wire harness assemblies, will open for public subscription on Monday, October 31, 2022 and conclude on Wednesday, November 2, 2022. The price band has been fixed at ₹197 to ₹207 per share. The company on Friday said it has raised ₹225 crore from anchor investors days ahead of its initial share sale.
As of 11 am on day 1, the issue has been subscribed 0.28 times with retail investors’ category fully booked 1.37x and NIIs 0.16x, BSE d
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.
As per market observers, DCX Systems shares are commanding a premium (GMP) of ₹75 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.
“At higher price band, DCX is demanding an EV/Sales multiple of 1.2x, which is lower than the peer average. Considering the favorable macros for the defence manufacturing sector and for the company, we feel the IPO is attractively priced. Thus we assign a “SUBSCRIBE” rating for the issue,” said Choice Broking.
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 proposes to utilise the net proceeds from the fresh issue towards debt payment, funding working capital requirements, investment in its wholly-owned subsidiary Raneal Advanced Systems to fund its capital expenditure and general corporate purposes.
“In terms of valuations, the post-issue P/E works out which is low compared to its peers like Paras Defense & Space Technologies Ltd, Data Patterns (India) ltd and Sundram Fasteners Ltd. Further, DSL has better revenue/PAT growth (CAGR of 57%/159% respectively) over 2 years, healthy return on equity and company also has a strong order book which provides visibility for next 2 years. Considering all the positive factors, we believe this valuation is at reasonable levels. Thus, we recommend a SUBSCRIBE rating on the issue,” said Angel One.