DCX Systems IPO: Information analysis

About the company
What does DCX Systems do: It manufactures electronic sub-systems and cable harnesses for the defence and aerospace sectors. Its services entail system integration, manufacturing a comprehensive array of cables, wire harness assemblies and kitting.

Strengths:

• Preferred Indian Offset Partner (IOP) for the defence and aerospace industry: It is one of the leading Indian Offset Partners for the IAI Group, Israel and the Indian defence market for manufacturing electronic sub-systems and cable and wire harness assemblies.
• Customisable and high-quality products: It manufactures cable and wire harnesses according to customer requirements. The company has supplied over 10,000 units in the last three fiscals and has not incurred any warranty claims.

Weaknesses:

• High revenue concentration: Its top three customers accounted for 73.26 per cent, 86.90 per cent, and 80.55 per cent of its revenue from operations in FY20, 21, and 22, respectively.
• Inability to pass on cost increases: The business is highly sensitive to raw material price volatility. As it cannot pass on the cost increases to its customers, it cannot form long-term agreements with its suppliers.

Risk score (The lower the score, the riskier the stock)

Disclaimer: This is not a stock recommendation. Do your due diligence before investing.