DCX Systems shares see strong listing. Should you buy/hold/sell?

Advising long-term investors to hold DCX shares, Ravi Singh, Vice President & Head of Research at Share India said, “The growing Indian landscape for defence and aerospace may serve as a key opportunity for DCX Systems and holds a positive outlook. Investors may consider DCX Systems shares from long term perspective.”

Pravesh Gour, Senior Technical Analyst, Swastika Investmart said, “The company’s strong listing can be attributed to unexciting investor subscription levels. As the company has been able to create long-term and deeply entrenched relationships with its clients due to its execution capability in terms of time & cost, ability to maintain confidentiality, and experienced management team. Nevertheless, there are concerns with the company like high dependence on key customers, the majority of the revenue from low margin built to print offset defense contracts, the regulated nature of the industry, high debt to equity, and high working capital requirements.” 

Astha Jain, Senior Research Analyst at Hem Securities said, “We recommend to book partial profit and hold remaining allotment as company being among the preferred Indian Offset Players for the defence and aerospace industry with global accreditations has technology enabled and scalable end-to-end capabilities. Company is well-positioned to capitalize on industry tailwinds has track record of consistent financial performance along with experienced and qualified Promoters.”

However, Swastika Investmart expert advised investors to lock-in listing gains and maintained that only aggressive investors should consider making a long-term commitment to the company. Those who applied for listing gains can maintain a stop loss of ₹245.

In three days bidding from 31st October 2022 to 2nd November 2022, DCX Systems IPO subscribed 69.79 times whereas its retail portion was subscribed 61.77 times. In QIB category, the public issue was subscribed 84.32 times while in NII segment, the public issue got subscribed 43.97 times.

Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd, said: There are concerns with the company like high dependence on key customers, the majority of the revenue from low margin built to print offset defense contracts, the regulated nature of the industry, high debt to equity, and high working capital requirements. Therefore, we advise investors to lock in listing gains and only aggressive investors should consider making a long-term commitment to the company. Those who applied for listing gains can maintain a stop-loss of ₹245.”

DCX Systems IPO consisted of issuance of fresh equity shares worth ₹400 crore. Apart from the fresh issue, the promoters and shareholders of the company sold shares worth ₹100 crore via an offer for sale (OFS). NCBG Holdings and VNG Technology are the promoters of the company.

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.