DCX Systems locked in 5% upper circuit after arm gets license to manufacture defence equipment

DCX Systems shares haven't performed well and remained largely flat, gaining just 1.6 percent since the start of the year.

Shares of DCX Systems surged 5 percent, hitting the upper circuit of Rs 345 on September 17, after its subsidiary secured an industrial license from the Cochin Special Economic Zone (CSEZ) to manufacture and test microwave submodules, along with avionics and defence electronic equipment.

The newly acquired license permits DCX Systems’ wholly-owned subsidiary to manufacture items classified under CATEGORY-A, according to the Ministry of Defence Security Manual. These products are considered highly classified and sensitive, representing the highest level of security in defence manufacturing. The granted license is valid for 15 years.

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Last month, DCX secured a Rs 187 crore order from an overseas customer for the supply of electronic kits. The order is said to be executed within 12 months. In early August, the company secured an order worth Rs 107 crore from domestic and overseas customers for the supply of electronic kits, cables, and wire harness assemblies. The order is expected to be executed within 12 months.

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In the recently concluded June quarter, DCX Systems saw its revenue decline by 19 percent year-on-year, while net profit plunged 69 percent. The company also posted an operating loss of Rs 4.8 crore, largely attributed to rising costs.

Despite these setbacks, KR Choksey remains optimistic about the company's long-term prospects. The brokerage expects Q2 to provide greater clarity on growth acceleration, driven by a strong order pipeline. It maintained its earnings estimates for FY25 and FY26, supported by a robust order book, increased focus on cable and wire harnessing, and the commercial production of Raneal Advanced Systems.

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DCX Systems shares haven't performed well and remained largely flat,  gaining just 1.6 percent since the start of the year.

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