DCX Systems IPO subscribed 3.7x on day 2 so far; shares trade at 40% premium in grey market

The issue, which kicked off for subscription on Monday, October 31, can be subscribed till Wednesday, November 02. The company is selling its shares in the range of Rs 197-200 apiece to raise Rs 500 crore via its initial stake sale.

According to the data from BSE, investors made bids for 5,31,59,256 equity shares or 3.66 times compared to 1,45,11,146 equity shares on offer for subscription by 12 pm on Tuesday.

The quota for retail bidders was subscribed 14.72 times, whereas the allocation for HNI investors fetched 4.08 times bids. The portion for institutional investors was subscribed to merely 3%.

The company has reserved 50% of the net offer for qualified institutional buyers (QIBs), whereas non-institutional buyers (NIIs) will get a 15% allocation. Retail bidders will get the remaining 35% allocation.

DCX Systems is among the leading Indian players in the manufacture of electronic sub-systems and cable harnesses. It had 26 customers in Israel, the United States, Korea and India as of June 30, 2022.

It is a preferred Indian offset partner (IOP) for foreign original equipment manufacturers (OEMs) for executing aerospace and defence manufacturing projects.

DCX Systems was commanding a premium of Rs 75-80 per share or 37-40% over its given price band in the grey market.

The majority of the brokerage firms have suggested subscribing to the issue, citing its strong order books in the defence and aerospace industry with global accreditations, visibility of the cash flows and its position to capitalize on industry tailwinds.

At the higher price band, DCX is demanding an EV/Sales multiple of 1.2x, which is lower than the peer average, said Choice Broking in its pre-IPO note.

“Considering the favourable macros for the defence manufacturing sector and for the company, we feel the IPO is attractively priced,” the brokerage said with a subscribe rating on the issue.

The company has reported consistent financial performance over the years and is technology enabled with the capacity to scale further without incurring too much capital expenditure, said

. “Its order book is growing with repeat orders from existing customers.” The brokerage has assigned a subscribe rating on the issue.
, and Saffron Capital Advisors are the book-running lead managers to the issue, whereas Link Intine India is the registrar to the issue. Shares of the company will list on both BSE and NSE.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)