DCX Systems files for IPO; aims to raise up to Rs 600 Crores

DCX Systems, a leading manufacturer of electronic sub-systems and cable harnesses in India, has filed IPO draft papers with SEBI to raise up to Rs 600 crores.

Summary in Brief

Details of the issue

• According to the details in the DHRP, DCX Systems' IPO of Rs 600 crores will comprise of fresh equity shares issue of Rs 500 crores, while an offer for sale (OFS) of up to Rs 100 crores through the selling of shares by the existing shareholders. 
• The Rs 100 crores OFS will consist of the two promoters- NCBG Holdings Inc and VNG Technology Pvt Ltd each selling shares worth Rs 50 crores. Both the promoters currently hold 44.32% stake each in the firm.
• DCX Systems may also explore pre-IPO placement of an amount aggregating up to Rs 50 crores. If this happens, the amount that will be raised through the fresh issue of equity shares will be reduced.

IPO proceeds will be used for: 

• Repayment/prepayment of existing debts of Rs 120 cores out of the total borrowing of Rs 451.51 crores
• Invest Rs 200 crores to fund working capital requirements
• Use Rs 44.90 crores in Raneal Advanced Systems Private Limited (its wholly owned subsidiary) to setup a manufacturing plant of electronic manufacturing services (EMS)
• Rest to be used in general operational expenses

About the company

• DCX Systems is primarily engaged in manufacturing cable harness assemblies and system integration. It is also involved in the kitting business. 
• The company operates via its manufacturing facility at the Hi-Tech Defence and Aerospace Park SEZ in Bengaluru. The facility is spread over an area of 30,000 sq ft where in-house environmental and electrical testing and wire processing are done.
• Besides India, the company also has overseas clients in countries like the USA, Israel, and South Korea. It boasts an overall client base of 26 customers that also includes some Fortune 500 companies, MNCs, and several startups.

Competitive Advantage 

"We believe our competitive advantages include efficiency in operations resulting in timely delivery to customers, maintaining quality control and product security. This has enabled our Company to develop long-term and entrenched relationships with OEM customers that has resulted in growth in our operations and sizable order book," DCX Systems said. 

Financials

• As per the DRHP, DCX Systems registered a revenue of Rs 728.23 crores in the last nine months of the previous year (2021). 
• This is over 32% growth in revenue as compared to Rs 548.49 crores of the same period of the previous year (2020). 
• The company has also posted an increase in order book which stood Rs 2,855 crores as of March 31, 2021 as compared to Rs 1,042 crores as of March 31, 2019.