Buy DCX Systems; target of Rs 360: KR Choksey

Buy

KR Choksey's research report on DCX Systems

DCX Systems delivered an all across miss on revenue/EBITDA/ PAT for Q3FY25 on account of prevailing pressure on margins. The revenue for the quarter remained flat. We believe prevailing pressure on margin on account of increased raw material prices & product mix continue to be the primary reason for -37%/-80%/-25% fall in Gross Profit/EBITDA/PAT in Q3FY25. The order book for the company stands robust at INR 33,590 Mn as of Q3FY25 aided by recent order wins from key players such as Lockheed Martin Global Inc, ELTA Systems Ltd and other overseas customers. Though the recent order wins have alleviated the concerns against order book but the key concern remains on the profitable execution. We have revised our FY25E/FY26E EPS estimates and introduced FY27E EPS to INR 4.1/ INR7.8/INR 12.0 from previous estimates of INR 7.4/ INR 10.3 (FY25E/FY26E) on account of lack of visibility associated with the near-term recovery of margins.

Outlook

We maintain our BUY rating on the counter and roll-over our valuation to FY27E EPS of INR 10.3 with a revised TP of INR 360 applying 35x P/E multiple on FY27E EPS on account of material margin recovery in 2HFY26 and FY27E.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

DCX Systems - 20022025 - kr