Strong retail interest sees DCX Systems IPO subscribed 2.19 times on day-1

Price band set at Rs 197-207 a share; retail portion sold 8.7x

The initial public offering (IPO) of DCX Systems was subscribed to 2.19 times on Monday, the first day of the issue. The institutional portion was subscribed by 0.03 times, the wealthy investor portion by 3 times, and the retail portion by 8.7 times. The company has priced its IPO at Rs 197-207 a share. The Rs 500 crore offering comprises a fresh issue of Rs 400 crore and an offer for sale of Rs 100 crore. Last week the company allotted shares worth Rs 223 crore to 12 anchor investors including BNP Paribas, Volrado Ventures, Theleme, HDFC Large & MidCap, and Motilal Oswal MF among others.

DCX Systems plans to utilise the proceeds of the fresh issue for repayment of debts and funding its working capital requirements. It also plans to fund the capital expenditure expenses of its subsidiary Raneal Advanced Systems. DCX  is a manufacturer of electronic sub-systems and cable harnesses. The company's products are used in communication systems, sensors, surveillance systems, missile systems, military armoured vehicles, and other electronic warfare systems.

Analysts said there are significant opportunities for companies like DCX Systems with defence sub-component manufacture being outsourced to the private sector. However, its dependence on offset defence contracts and high working capital requirements were flagged as key concerns. This week, four companies are looking to raise more than Rs 4,100 crore via IPOs.