DCX Systems was reportedly commanding a premium of Rs 88-90 per share in the unofficial market, which translates into an amount 42-45% higher than its issue price of Rs 207 apiece.
Dealers tracking the grey market said DCX Systems is a standout among all listing contenders in the near term – thanks to its pure fundamental strength.
Abhay Doshi, co-founder, UnlistedArena, said consistent growth, sound fundamentals, strong business performance, robust order books and mild valuations support the premium for DCX Systems in the grey market.
The initial public offering of DCX Systems was open for subscription between October 31 and November 2, as the company raised Rs 500 crore via its initial stake sale by offering shares in the range of Rs 197-207 apeice.
The issue was overall subscribed 69.79 times, with quota for qualified institutions getting a subscription for 84.32 times, whereas non-institutional bidders and retail portions were subscribed 43.97 times and 61.77 times, respectively.
Pravesh Gour, Senior Technical Analyst, , said there are concerns with the company like high dependence on key customers, the regulated nature of the industry, high debt to equity, and high working capital needs.
“Therefore, we advise investors to lock in listing gains and only aggressive investors should consider making a long-term commitment to the company,” he added.
DCX System is engaged in the business of system integration in areas of defence radar systems, sensors, electronic warfare, missiles, and communication systems.
In 2020, the company commissioned a new manufacturing facility at the Hi-Tech Defence and Aerospace Park SEZ in Bengaluru, Karnataka.
Arijit Malakar, Head of Research – Retail, Ashika Group, said the company has a healthy order book of Rs 2,563 crore with revenue visibility of more than 2 years.
“There has been a strong tailwind in the defence sector given the government’s focus to make India a defence export hub and DCX System could be a long-term bet in the defence space,” he added.
Among the other listing bound companies, Archean Chemicals (Rs 62 GMP), Global Health (Rs 20 GMP), Kaynes Technology (Rs 80 GMP), Bikaji Foods (Rs 38 GMP), Fusion Micro Finace (Rs 5 GMP),
(Rs 6 GMP) and Five Star Business (Rs 9 GMP) are active in the grey market.
Some of these companies have strong business models and decent growth prospects but none of them are likely to pull off a wonder like DCX Systems as the valuations of these companies are quite stretched.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)
