DCX Systems files draft papers to raise Rs 600 crore via IPO

DCX Systems has filed draft papers with Securities Exchange Board of India to raise around Rs 600 crore via an initial public offering.

The IPO will consist of a fresh issue of Rs 500 crore and an offer for sale (OFS) of up to Rs 100 crore by its existing shareholders and promoters.

NCBG Holdings Inc and VNG Technology Pvt Ltd will each sell shares worth Rs 50 crore. Currently, both these promoters hold 44.32 percent stake each in the firm.

The firm proposes to utilise Rs 120 crore towards funding of its debt. As of 28 February 2022, the total borrowings of the company was at Rs 451.51 crore.

The company also plans to use Rs 200 crore towards funding of its working capital requirement in the FY23. The firm plans to use Rs 44.90 crore towards funding capital expenditure of its subsidiary Raneal Advanced Systems PVt Ltd for setting up a manufacturing facility of electronic manufacturing services (EMS) via Raneal Advanced Systems Pvt Ltd(RASPL).

Edelweiss Financial Services Ltd, Axis Capital Ltd and Saffron Capital Advisors Pvt Ltd are the lead managers to the issue.

The firm is the  leading Indian player for the manufacture of electronic sub-systems and cable harnesses in terms of manufacturing capability and revenue in Fiscal 2021. It is primarily engaged in system integration and manufacturing a comprehensive array of cables and wire harness assemblies and is also involved in kitting.

The firm operates through its manufacturing facility located at the Hi-Tech Defence and Aerospace Park SEZ in Bengaluru, Karnataka. Its facility is spread over an area of 30,000 square feet and is set up for complete in-house environmental and electrical testing and wire processing.   As of December, 2021, it had 26 customers in Israel, United States, Korea and India, including certain Fortune 500 companies, multinational corporations and start-ups.

Its key customers include Elta Systems Limited, Israel Aerospace Industries Limited – System Missiles and Space Division, Bharat Electronics Limited, Astra Rafael Comsys Private Limited, Alpha-Elsec  Defense and Aerospace Systems Private Limited, Alpha Design Technologies Private Limited, Astra Microwave Products Limited, Kalyani Rafael Advanced Systems Private Limited, SFO Technologies Private Limited and DCX-Chol Enterprises Inc.

As of 28 February, its order book stood at Rs 2499.30 crore. " 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", the firm said in DRHP.

For nine month ended December 2021, its revenue stood at Rs 728.23 crore against Rs 548.49 crore a year ago. Net profit for the period stood at Rs 33.20 crore versus Rs 28.29 crore last year.