The shares of this smallcap company locked a 5 percent upper circuit after its wholly-owned subsidiary was granted an industrial license to manufacture defence products. In six months the stock has delivered more than a 20 percent return to its shareholders.
Price Movement:
With a market capitalization of Rs. 3,854 crores, the shares of DCX Systems Ltd started Tuesday’s trading session on a flatter note at Rs. 330 compared to its previous close of Rs. 330.40. During the trading session, the stock clocked a 5 percent upper circuit at Rs. 346.90 apiece.
What Happened:
Such a bullish movement in the share price was observed after the company in an exchange filing announced that its wholly-owned subsidiary, Raneal Advanced Systems Private Limited, had been granted an industrial license by the Industrial Licensing Section of the Office of the Development Commissioner for Cochin Special Economic Zone, EOUs, and SEZs in Karnataka, Ministry of Commerce & Industry, Government of India.
The defence company was granted the industrial license for the production, assembly and testing of microwave submodules for command and guidance units for missile subsystems, for the integration and manufacturing of Avionics & Defence Electronic equipment and for the production, assembly and testing of radar systems and EW Systems.
These equipments are categorized under Category-A according to the Ministry of Defence Security Manual, indicating they are considered sensitive from a security standpoint and the industrial license undertaking to manufacture these items will be located in Bengaluru. The license is valid for a period of 15 years.
Financials:
Looking at the company’s financial statements, the revenue decreased by around 82 percent from Rs. 746.20 crores during the March quarter to Rs. 138.08 crores in the June quarter. On the other hand, the net profits declined by around 91 percent from Rs. 32.95 crores to Rs. 2.94 crores during the same timeframe.
Order Book:
As of June 30th, 2024, the company has a robust order book of Rs. 1,937 crores, with a robust pipeline that is expected to drive future growth.
Customer Base:
DCX Systems has a diverse customer base that includes major domestic and international defence and aerospace companies, including Elta Systems, Israel Aerospace Industries, Bharat Electronics, and several other prominent Indian and multinational corporations.
Future Outlook:
DCX Systems further plans to improve its supply chain efficiency, and cost efficiency, with better profit margins by focusing on new verticals like Make in India, JVs and Transfer of Technology (ToT).
Furthermore, the company is focused on diversifying its revenue streams beyond system integration, with expectations of increased contributions from cable, PCBA, and kitting services.
Additionally, the company is actively pursuing opportunities in the domestic market, particularly with Indian Railways for the obstacle detection system.
Important Financial Ratios:
In terms of key financial metrics, the company reported a Return on Equity (RoE) of 6.72 percent and a return on capital employed (RoCE) of 10.83 percent for the period spanning FY23-24. Further, the net profit margin during FY23-24 was at 5.32 percent.
Headquartered in Bengaluru, DCX Systems Limited is primarily engaged in system integration and manufacturing a comprehensive array of cables and wire harness assemblies for the aerospace and defence industries
Written By Vaibhav Patil
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
