PL Capital - Prabhudas Lilladher, in its latest note on system integration and wire harnessing company DCX Systems has projected a 49% upside for the stock, and anticipates increase in orders from defence PSUs and private companies after the Make in India push.
The company also received an order worth Rs 483 crore from an Israeli company ELTA Systems on January 3.
DCX Systems is expected to benefit from demand for items that were previously imported but are now made by Indian OEMs such as BEL, HAL, L&T and others. PL noted that DCX has also onboarded America's Lockheed Martin as a major customer in 2024, have recieved orders worth Rs 850 crore from the company in 2024. With Tata Group also collaborating with Lockheed, PL believes the prospects for DCX Systems are going to further improve, going forward.
As per government data cited by PL Capital, the pending offset obligations with foreign OEMs amount to $13.21 billion and DCX is aiming at an opportunity size of $1 billion within this market. This, along with the Make in India push and a larger export focus promises to generate more business opportunities for the company, said the PL note. As per Defence Ministry rules, orders below Rs 2,000 crore threshold need an Indian company as a prime contractor with up to 50% of sourcing to be done domestically.
DCX Systems is also in talks with US and Israeli companies for Transfer of Technology (ToT) to manufacture a list of items that cannot be imported.
Centre has plans to step up on defence-related reforms in 2025, with focus on cyber and space domains, along with emerging technologies like Artificial Intelligence and Machine Learning.
Shares of DCX Systems are higher by 8% in the last one year and the company has a market capitalisation of Rs 4,000 crore.
Read more: DCX Systems Standalone September quarter earnings
According to a Frost and Sullivan report and Ministry of Defence data, the global defence electronics market is set to grow at a CAGR of 6.61% between CY22-30, to reach $237 billion. The Indian defence electronics market is expected to grow at a faster CAGR of 13.71% to reach $7.2 billion by CY30.
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