The three-day initial public offering (IPO) of DCX Systems, manufacturer of cables and wire harness assemblies, will open for public subscription today. The initial share sale, comprising fresh issuance of shares worth to Rs 400 crore and an offer for sale (OFS) of up to Rs 100 crore by existing shareholders, will be available for bidding for three trading days ending November 2.
DCX Systems IPO: Price Band
The price band for DCX Systems IPO has been fixed at Rs 197-207 per share. At least 75 per cent of the IPO is reserved for qualified institutional investors, up to 15 per cent for high-net-worth individuals, and 10 per cent for retail investors.
DCX Systems IPO: Issue Size
The IPO consists of issuance of fresh equity shares worth Rs 400 with a face value of Rs 2 each. Existing promoters and shareholders will sell shares worth Rs 100 crore via an offer for sale (OFS).
DCX Systems IPO: Lot Size
Investors can subscribe to the DCX Systems IPO by betting for a lot of 72 shares or in multiples thereof. At the upper range of the price band, one lot of the IPO is worth Rs 14,904. A retail bidder can bid for 13 lots or 936 shares at maximum.
DCX Systems IPO: Participating Shareholders
NCBG Holdings and VNG Technology are the promoters of the company. The entities will be offloading their stake through the offer for sale. After the issue, the promoter shareholding will decline 24.61 per cent and come down to 73.58 per cent from the current 98.19 per cent stake held by the them in the company.
DCX Systems IPO: Objective
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 expenses and general corporate purposes.
DCX mopped up Rs 225 crore through its anchor book on October 28, ahead of the public issue opening. A total of 12 investors participated in the anchor book and the company finalized the allocation of 1.08 crore equity shares to anchor investors at a price of Rs 207 per share, which is the upper end of price band.
Investors including Volrado Venture Partners Fund, Cohesion MK Best Ideas, Quantum State Investment Fund, India SME Investments, Theleme India Master Fund, Resonance Opportunities Fund, Vikasa India EIF I Fund, and BNP Paribas Arbitrage made investment in the company via anchor book.
DCX Systems IPO: GMP Today
The company’s shares are commanding a premium of Rs 65-80 per share in the grey market currently, according to IPO Watch and IPO Central, both of which track the grey market movements.
Edelweiss Financial Services, Axis Capital, and Saffron Capital Advisors are the book-running lead managers to the issue. Link Intime India Private Ltd is the registrar of the share sale.
DCX Systems IPO: Financials
DCX reported a robust growth in the business and profitability over FY19-22. Driven by an increase in the system integration business, its revenue and PAT clocked CAGR of 57 per cent and 159 per cent respectively, while EBITDA margin expanded from 1.4 per cent in FY20 to 6.1 per cent in FY22.
DCX Systems IPO: What Should Investors Do?
“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.
“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 per cent/159 per cent 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.
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