DCX Systems' ₹500-cr IPO to open next week; all you need to know

The ₹500 crore initial public offering (IPO) of DCX Systems, a manufacturer of cables and wire harness assemblies, will open for public subscription on October 31, 2022. The three-day public offer, which is a mix of fresh equity shares and an offer for sale (OFS), will close on November 2, as per the document filed with the market regulator Securities and Exchange Board of India (SEBI). The shares of the homegrown defense sector company are likely to list on the domestic bourses- the BSE and the NSE- on November 11.

The Bengaluru-based company plans to raise ₹400 crore via fresh issuing of equity shares of the face value of ₹2 each, as against ₹500 crore proposed earlier. Besides, it will garner up to ₹100 crore through OFS as promoters - NCBG Holdings Inc and VNG Technology – would trim their shareholding in the company.

The price band of the offer has been fixed at ₹197 to ₹207 per equity share of the face value of ₹2 each. To subscribe, investors can make a minimum bid of 72 equity shares and in multiples of 72 shares thereafter.

The company intends to use IPO proceeds from fresh issue for the repayment of loans, funding working capital requirements, and investment in its wholly-owned subsidiary, Raneal Advanced Systems Private. The capital will be also used to fund its capital expenditure expenses and meet general corporate purposes.

As per the document filed with the SEBI, ₹110 crore will be used to repay loans, ₹160 crore to meet working capital requirements, and ₹44.9 crore to fund its capital expenditure expenses.

Under the IPO, 75% is reserved for qualified institutional buyers (QIB), 15% of the portion kept for non-institutional investors (NII), and 10% for retail investors.

On the financial front, the company has posted a consolidated net profit of ₹65.61 crore in the first quarter ended June 2022 (Q1 FY23), while revenue stood at ₹220.25 crore. The company’s revenue from operations grew at a CAGR of 56.64% from ₹449 crore in fiscal 2020 to ₹1,102 crore in fiscal 2022. The company’s order book also rose from ₹1,941 crore as of March 31, 2020, to ₹2,369 crore as of March 31, 2022.

The joint Book Running Lead Managers (BRLM) for this issue are Edelweiss Financial Services, Axis Capital, and Saffron Capital Advisors, while Link Intime India is the registrar to the issue. 

DCX Systems, primarily engaged in system integration and manufacturing a comprehensive array of cables and wire harness assemblies, commenced operations in 2011.  The company is a rapidly growing company in the Indian defense space and has been a preferred Indian Offset Partner for foreign original equipment manufacturers for executing aerospace and defense manufacturing projects.