DCX Systems shares rally 48% over issue price. Should you buy, hold or sell?

Shares of DCX Systems, which made a stellar debut on Friday, continued to add to the listing gains and were up 48 per cent over the issue price within the first hour of listing. Analysts said investors with risk appetite can hold the stock for long-term while investors with short investment horizon can book profit partially.

Astha Jain of Hem Securities said one can book profits on 50 per cent of the holdings and keep the rest half as she thinks the scrip can still deliver healthy returns over the next 6-12 months. 

Pravesh Gour, Senior Technical Analyst at Swastika Investmart said DCX has been able to create long-term and deeply entrenched relationships with its clients due to its execution capability in terms of time & cost, ability to maintain confidentiality, and experienced management team.

"But there are concerns such as high dependence on key customers, the regulated nature of the industry, high debt to equity and high working capital requirements. Therefore, we advise investors to lock in listing gains and only aggressive investors should consider making a long-term commitment to the company. Those who applied for listing gains can maintain a stop loss of Rs 245," Gour said.

Arijit Malakar, Head of Research - Retail at Ashika Group said 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.

"The government and aims to become a $5 billion export country by 2025 in the aerospace and defence goods sector. Private players like DCX Systems may play an important role in achieving this target. The company has a healthy order book of Rs 2,563 crore with revenue visibility of more than 2 years," he said.

Earlier today, DCX Systems got listed at Rs 287 on NSE, a 38.65 per cent premium over its issue price of Rs 207. On BSE, the stock debuted at Rs 286.25 apiece, up 38.29 per cent. 

The initial share sale of Bengaluru-based company, which was sold from October 31 to November 2, was subscribed 69.79 times. The quota reserved for qualified institutional buyers (QIBs) was subscribed 84.32 times while that of the non-institutional investors' category received 43.97 times subscription.

The quota for retail individual investors (RIIs) was subscribed 61.77 times.

DCX Systems' was the highest subscription level this year after Harsha Engineers International's 74.70 times and  Electronics Mart's 71.93 times subscription. Dreamfolks Services (56.68 times) and Campus Activewear (51.75 times) are two other IPOs that received over 50 times subscription this year.

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