DCX India Fundamentals Analysis and Technical Analysis

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DCX systems share price analysis based on its fundamentals and technical.

DCX Systems: A Brief Overview

Before entering into a depth analysis of DCX Systems let’s have a look at a brief history. DCX Systems, originally incorporated as “DCX Cable Assemblies Private Limited” on December 16, 2011, in Bengaluru, Karnataka, began its journey as a private limited company under the Companies Act, 1956. It received its certificate of incorporation from the Registrar of Companies, Karnataka (RoC). Later, on November 24, 2021, the company’s name was changed to ‘DCX Systems Private Limited’ through a special resolution passed by its shareholders. A fresh certificate of incorporation reflecting this name change was issued by the RoC on January 3, 2022.

Subsequently, in accordance with a special resolution passed by its shareholders on February 2, 2022, the company transitioned into a public limited company and adopted the name “DCX Systems Limited.” The RoC issued a new certificate of incorporation on February 18, 2022, reflecting this change.

DCX Systems is a prominent player in India’s defense and aerospace sector, boasting significant manufacturing capabilities and revenue in Fiscal 2022. It specializes in the manufacture of electronic sub-systems and cable harnesses. The company’s core activities encompass system integration, the production of various cable and wire harness assemblies, and kitting services. Since its establishment in 2011, DCX Systems has been a preferred Indian Offset Partner (IOP) for foreign original equipment manufacturers (OEMs), particularly for aerospace and defense projects. Notably, it holds the distinction of being one of the largest IOPs for ELTA Systems and Israel Aerospace Industries (IAI Group) for the Indian defense market, specifically in the manufacturing of electronic sub-systems, cable, and wire harness assemblies.

Over the years, DCX Systems has expanded its manufacturing capabilities and achieved substantial growth in its order book.

Business Segments

DCX Systems operates within the following business verticals:

1. System Integration: The company specializes in system integration across various domains, including radar systems, sensors, electronic warfare, missiles, and communication systems. It offers product assembly and system integration services of varying complexities to meet the unique requirements of its customers. System integration services are an integral part of its comprehensive range of electronics and electro-mechanical assembly and enclosure assembly. Additionally, DCX Systems provides product repair support for the components it manufactures.

2. Cable and Wire Harness Assemblies: DCX Systems manufactures a wide array of cables and wire harness assemblies, including radio frequency cables, co-axial cables, mixed-signal cables, power cables, and data cables. These products find application in diverse areas, such as communication systems, sensors, surveillance systems, missile systems, military armored vehicles, and electronic warfare systems, all tailored to meet the specific needs of its aerospace and defense industry customers.

3. Kitting: The company excels in supplying assembly-ready kits composed of electronic and electro-mechanical parts. It manages the entire procurement process, including sourcing components from customer-approved suppliers and providing a ‘Certificate of Compliance’ for traceability. Moreover, DCX Systems ensures controlled storage of moisture-sensitive devices to ensure that customers receive complete, assembly-ready kits precisely when needed for production.

In addition to these core activities, DCX Systems also undertakes specific job work services, including assembly and testing of materials directly supplied by its customers.

This brief overview showcases DCX Systems’ evolution, core competencies, and contributions to India’s defense and aerospace industry.

DCX Systems Ltd (DCX) stands as a significant supplier of electronic systems and solutions tailored for India’s defense and aerospace sectors. The company proudly presents a strong history of growth, with consistent double-digit rises in both revenue and profits over the last three years. DCX is strategically positioned to leverage the growing demand for defense and aerospace products in India, spurred by increased government investments in military modernization.

Current Market Performance

DCX’s stock price has shown a significant upward trajectory in recent months, presently trading at a premium compared to its historical valuations. However, the company’s fundamental strengths remain intact, and the outlook for the defense and aerospace industry in India appears positive. Considering these factors, there is potential for DCX shares to continue appreciating in the long term.

Fundamental Analysis of DCX

Several key factors underpin the fundamental analysis of DCX:

Positive Growth Outlook: The defense and aerospace sector in India is set for significant expansion, with an estimated Compound Annual Growth Rate (CAGR) of 7%-8% anticipated in the next five years. DCX is well-placed to seize this opportunity, given its established history of securing contracts from both the Indian government and private sector organizations.

2. Robust Financial Health: DCX maintains a strong financial footing, characterized by minimal debt levels and the ability to generate robust cash flows. This financial stability empowers the company to explore new avenues for growth and navigate market fluctuations with confidence.

3. Seasoned Leadership: DCX is led by a team of seasoned and highly qualified professionals, each possessing a track record of successful endeavors. This leadership instills trust in the company’s capacity to execute its strategic vision and attain its growth targets.

Company Fundamental Essentials:

Market Cap3305.05 Cr.
No. Of Shares9.67 Cr.
PE43.43
PB5.60
Dividend Yield0%
Book Value59.64
Cash800.22 Cr.
DEBT502.62 Cr.
EPS7.87
ROE79.83 %
Sales Growth71.92 %
Profit Growth121.98 %
Company Fundamental Essentials

Ratio Analysis of DCX:

Several key ratios can be employed to analyze DCX:

1. Price-to-Earnings (P/E) Ratio: DCX’s current P/E ratio stands at 31.18, slightly higher than the Indian stock market average. However, this valuation is justified by the company’s strong growth prospects and solid financial foundation.

2. Price-to-Book (P/B) Ratio: DCX’s P/B ratio is currently 5.60, slightly below the Indian stock market average. This suggests that DCX shares are trading at a reasonable value.

3. Return on Equity (ROE): DCX boasts an ROE of 79.83%, exceeding the Indian stock market average. This indicates the company’s efficient utilization of capital to generate profits.

4. Debit to Equity Ratio: The company has a 4.27 D/E ratio which means that the company has a high proportion of debit in its capital.

5. Sales Growth: The sales growth of the DCS system is 71.92 % which is fair in relation to its growth and performance.

6. Dividend Yield: The dividend yield of the DCX system is Rs. 0 which is not good for its investors.

Share Holding Pattern:

The promoter holding in the company is more than 71.73 % which indicates that the promoters trust the company’s future growth.

FII and DII holdings in the company are 0.69 % and 9.29 % which is below 10 % which indicates the failure to attract smart investors.

Public holding in the company is 18.29 % which may create healthy liquidity in the market.

Technical analysis of DCX systems:

DCX System weekly chart

To analyze the stock from a long-term investment point of view we are taking a weekly chart to get a clear trend direction and identify major supports and resistances and entry and exit points. So let’s take a week’s chart to analyze stock.

On the weekly chart, the stock is trading at 341 and the trend is up. The stock broke its all-time and 52-week high which indicates the stock is in demand and the investors are ready to buy this at any price level.

So the major support and resistances for DCX systems share price:

Major supports for DCX systems are first support is 320, second support is 305, and third support is 283. major resistance for the stock is 350, the second resistance is 421, and the third resistance is 480.

DCX Systems Share Price Targets:

As per the price action and trend analysis, the first target of the DCX system is 420, the second target is 480, and the third target is 687.

DCX Systems Share Price Targets for 2023

DCX Systems Share Price Targets for 2023 are a minimum of 320 and maximum will be 448 and the expected target will be 420.

DCX Systems Share Price Targets for 2025

DCX Systems Share Price Targets for 2025 is a minimum of 410 and maximum will be 710 and the expected target will be 687.

DCX Systems Share Price Targets for 2030

DCX Systems Share Price Targets for 2030 is a minimum of  903  and maximum will be 1151 and the expected target will be 1033.

Risks to Consider

Investors should be mindful of potential risks before considering DCX shares:

1. Global Economic Slowdown: A global economic downturn could adversely affect the demand for defense and aerospace products.

2. Government Spending: Reductions in government spending on defense and aerospace in India may impact DCX’s prospects.

3. Competition: DCX faces competition from both domestic and international companies in the defense and aerospace sectors.

Conclusion:

In conclusion, DCX shares appear to be a promising long-term investment. The company exhibits strong growth potential, maintains a healthy financial position, and is led by a capable management team. However, it’s essential for investors to be aware of the associated risks when considering an investment in DCX shares. If you think this article gives any good information about the DCX system then rate us and share this article with your friends and family.

FAQ:

What is DCX Systems, and when was it established?

DCX Systems, originally known as “DCX Cable Assemblies Private Limited,” was established on December 16, 2011, in Bengaluru, Karnataka, India.

What are the core business activities of DCX Systems?

DCX Systems specializes in system integration, manufacturing cable, and wire harness assemblies, and providing kitting services for the defense and aerospace sectors. They also offer product repair support for the components they manufacture.

what are DCX Systems Share Price Targets?

As per the price action and trend analysis, the first target of the DCX system is 420, the second target is 480, and the third target is 687.

what are DCX Systems Share Price Targets for 2023?

DCX Systems Share Price Targets for 2023 are a minimum of 320 and maximum will be 448 and the expected target will be 420.

what are DCX Systems Share Price Targets for 2025?

DCX Systems Share Price Targets for 2025 is a minimum of 410 and maximum will be 710 and the expected target will be 687.

what are DCX Systems Share Price Targets for 2030?

DCX Systems Share Price Targets for 2030 is a minimum of  903  and maximum will be 1151 and the expected target will be 1033.

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