DCX Systems has been given a BUY rating by KR Choksey, with a target price of INR 466, which is lower than the previous target of INR 519.

The company had a subdued performance in H1FY25, but in Q2FY25, it secured significant order wins totaling INR 30,000 million, which has increased confidence in its revenue prospects for the near to medium term.

Although there have been improvements in gross margins on a sequential basis, higher material costs have put pressure on margins, resulting in lower earnings. The EBITDA margin is still negative but has shown improvement compared to previous periods.

Due to ongoing challenges with recovering raw material costs and persistent margin pressures, the EPS estimates for FY25E and FY26E have been revised down by 34% and 10% respectively.

According to the report, DCX Systems is expected to become a major player in the Electronics Manufacturing Services (EMS) sector, particularly in the railway and defense markets. The company's P/E multiple on FY26E EPS is 36x, reflecting its growth potential in these sectors.