GMP, Subscription, Risks, Other Details; Should you Invest?

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DCX Systems’ IPO to raise up to Rs 500 crore received bids for two times the shares on Monday, the first day of the bidding process. 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: Subscription Status

The public offer has garnered bids for 5.05 crore shares against an IPO size of 1.45 crore shares subscribing 2.11 times on October 31, the first day of bidding. Retail investors showed good interest, investing for 8.71 times shares of the allotted quota, while the portion set aside for non-institutional investors was subscribed 2.16 per cent.

Qualified institutional investors have bought 2.66 lakh shares so far, against the 81.65 lakh shares reserved for them.

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

As per market observers, DCX Systems shares are commanding a premium (GMP) of Rs 74 in the grey market today.

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: Risk

BP Equities said the shift from passive to active radar solutions will also provide numerous opportunities for the company, it said with a subscribe rating on the issue. “However, any changes in the offset defence policies remain a key risk.”

DCX Systems IPO: What Should Investors Do?

“DCX, being preferred IOP in the Defence & aerospace space is well placed to capture the industry tailwinds. We like its focus on revenue/geography diversification, customer base expansion and inorganic growth which could keep the earnings growth strong. It is valued at 30.5xFY22 P/E which is reasonable compared to listed peers. Given the fancy for Defence stocks and continuous news flows in that space, we expect the IPO to do well. We suggest investors to Subscribe for listing gains,” said Motilal Oswal.

Disclaimer: The views and investment tips by experts in this report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

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