DCX Systems files DRHP with SEBI for Rs.600 crore IPO
DCX Systems has just filed the draft red herring prospectus (DRHP) with SEBI for its proposed IPO. The company will look to raise around Rs.600 crore in the IPO through a mix of a fresh issue and an offer for sale (OFS).
The normal time taken for the SEBI approval to come in after the DRHP filing is 2-3 months assuming no major objections. So the approvals for the IPO could logically come in around June or July this year.
The Rs.600 crore of DCX Systems IPO will comprise of Rs.500 crore by way of a fresh issue of shares and an offer for sale (OFS) of up to Rs.100 crore by early shareholders and the promoters of the company.
The two promoter outfits (NCBG Holdings Inc and VNG Technology Pvt Ltd) will sell shares worth Rs.50 crore each in the OFS. On a pre-IPO basis, both these promoters hold 44.32% stake each in DCX Systems Ltd.
Regarding the utilization of the fresh issue proceeds of Rs.500 crore, the company will use about Rs.120 crore to repay debt. That would defray a little over one-fourth of the total debt of Rs.452 crore of DCX Systems.
In addition, it will use Rs.200 crore towards financing its working capital requirements and another Rs.45 crore for funding its capital expenditure. The capex is for its subsidiary (RASPL) to set up electronic manufacturing services (EMS).
DCX Systems is one of the leading Indian players in the manufacture of specially designed electronic sub-systems and cable harnesses in terms. The company is primarily engaged in system integration and manufacturing of the complete range of cables and wire harness assemblies.
In addition, DCX Systems is also involved in kitting. DCX currently has 26 customers spread across Israel, the US, South Korea, apart from the domestic Indian market.
DCX has its manufacturing facility in Hi-Tech Defence and Aerospace Park SEZ in Bengaluru, which is spread over an area of 30,000 SFT.
Some of its key customers include Elta Systems, Israel Aerospace Industries, Bharat Electronics, Astra Rafael Comsys, Alpha-Elsec Defense and Aerospace Systems, Alpha Design Technologies, Astra Microwave, SFO Technologies and DCX-Chol Enterprises Inc. Its clients include a number of Fortune 500 companies.
DCX has an impressive order book of Rs.2,499 crore and has established a reputation for operational efficiency, timely delivery, stringent quality control and product security. This has helped DCX nurture long-term relationships with OEM customers.
For the 9 months to Dec-21, DCX Systems reported total revenues of Rs.728.23 crore and net profits of Rs.33.20 crore. This implies a net profit margin of 4.4%. Revenues have grown 32.8% on YoY basis.
The issue will be lead managed by Edelweiss Financial Services, Axis Capital and Saffron Capital Advisors; who will also be the book running lead managers (BRLMs) to the issue. Link Intime India Private Ltd will be the registrars to the IPO. The stock would be listed on the NSE and on the BSE.
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