DCX Systems IPO, which got fully subscribed on Day 1 itself, received 4 times bids on Day 2 of the bidding process so far, thanks to strong interest from retail investors.
The Rs 500-crore issue attracted bids for 6,04,71,144 shares by 12.40 pm, which was 4.17 times the issue size of 1,45,11,146 shares. The quota reserved for non institutional investors was subscribed 4.83 times while that of retail individual investors by 16.46 times. The portfolio reserved for QIBs was subscribed 0.03 times.
“During FY20-22, DCX registered CAGR revenue, Ebitda and PAT growth of 56.6 per cent, 228.3 per cent and 159.5 per cent, respectively. Its order book has increased from Rs 1,941 crore in FY20 to Rs 2,369 crore in FY22. However, considering the low margin on higher exposure towards contract manufacturing through offsets, significant improvement in margins needs to be seen in future. Post issue P/E at 30.5 times FY22 EPS looks fair compared with peers like Data Patterns and Paras Defence,” ICICIdirect said in a note.
DCX Systems is engaged in system integration and manufacturing a comprehensive array of cables and wire harness assemblies and are also involved in kitting. It has a manufacturing facility in Bengaluru, Karnataka.
Last heard, the issue was commanding a grey market premium(GMP) of Rs 75-76.
The IPO comprises of a fresh issue aggregating up to Rs 400 crore and an offer for sale (OFS) of up to Rs 100 crore. Retail investors can bid for a minimum of 72 equity shares and in multiples of 72 equity shares thereafter.
At the upper limit of the price band, the post-issue PE works out to 30.5 times FY22 EPS, which is low compared with peers like Paras Defense & Space Technologies, Data Patterns and Sundram Fasteners.
“DCX Systems has better revenue growth CAGR of 57 per cent and PAT CAGR of 159 per cent over the last two years. It has healthy return on equity and a strong order book of Rs 2,564 crore, which provide visibility for the next 2 years. Considering all the positive factors, we believe valuations are at reasonable levels,” said Angel One, which has a subscribe rating on the issue.
Also Read: DCX Systems IPO gets fully subscribed, retail quota sees 5x bids
Also Read: DCX Systems IPO: Issue subscribed 77% so far on day 1
