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DCX Systems set for a booming upside

In this edition of The Beat, we are putting the spotlight on DCX Systems, a company catering to the high standards of precision engineering required in defence and aerospace industries. DCX Systems is a company engaged in the system integration of electronic systems and subsystems, along with allied products such as Printed Circuit Board Assemblies (PCBAs) and cable & wire harnessing.

The shift from import to "Make in India," the tightening of offset policies, the expansion into new geographies and customer acquisition, the successful implementation of backward integration for PCBAs, and the promising prospects of the obstacle detection solution in the Indian Railways have positioned DCX favourably.

On 31st December 2023, the order book stood at Rs.1095 crore. Execution during the three quarters following December 2023 amounted to Rs.1079.90 crore. As of 31st December 2024, the current order book exceeds Rs.3000 crore.

For FY26, we are projecting revenue of Rs.1900 crore. Current market cap is roughly ?4000 crore, with cash of ?980 crore in Balance Sheet. Hence, the stock is trading at FY26 market cap/sales of 2.1 times whereas industry average is around 10x, and enterprise value/sales of 1.60 times.

We have a target price of Rs.535 on the stock, anticipating an upside of 49%.   

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