Frontier Springs Ltd Q4 FY24 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Management growth scorecard
Revenue
Category 2
Margin
Category 3
Fundraise
No
Order
Yes
Capex
Yes
2 of 5 growth signals are positive.
Full analysisRevenue guidance
Category 2- Targeting Rs. 500 crores gross sales by FY26-27, up from Rs. 250 crores expected in FY25 and Rs. 150 crores in FY24.
- Current capacity supports up to Rs. 350 crores; further CAPEX will address bottlenecks to reach Rs. 500 crores.
- Ongoing capacity expansions in coil springs, forging, and air springs to meet demand growth.
- 6-tonne hammer installation expected to add Rs. 15-20 crores revenue in FY25 and Rs. 50-60 crores from FY26 onwards.
- Air spring capacity currently meets 50% of Indian Railway's 7,000 coaches requirement, with plans to increase.
- Continuous inflow of orders with a robust order book of around Rs. 850 crores spanning coil springs, forging, and air springs.
- Confident in sustaining and gradually improving margins alongside volume growth.
- Growth fueled by Indian Railway's infrastructure expansion and new clients like Storm, ABB, and Siemens.
See what Frontier Springs Ltd management said on margin guidance — free account, 30 seconds.
Fundraise plans
No- Currently, the management has no intention to increase liquidity or go to the market through public or rights issues unless they encounter a very good project requiring it.
- No current plans for fundraising via debt or equity unless a strategic need arises.
- The company is funding capacity expansion, such as the 6-tonne hammer installation and air spring capacity increase, through internal accruals and existing resources.
- No additional CAPEX is required to reach Rs.350 crores revenue; some CAPEX (Rs.10-20 crores) might be required to reach Rs.500 crores, expected after 1.5 years.
- The company already has adequate land and facilities; expansions will focus on bottlenecks rather than greenfield projects.
- No mention of new fundraising initiatives in the immediate future.
See what Frontier Springs Ltd management said on order book — free account, 30 seconds.
Capex plans
Yes- Current CAPEX includes installation of a new 6-tonne hammer with a total investment of around ₹4 crore (₹2.5 crore spent so far).
- The 6-tonne hammer is expected to start contributing from Q3 FY25, adding ₹15-20 crore revenue this year and ₹50-60 crore from next year.
- An additional ₹10-15 crore CAPEX is anticipated between FY26-27 to address capacity bottlenecks and support growth from ₹350 crore to ₹500 crore revenue.
- This CAPEX will enhance capacities across coil springs, air springs, and forging segments, including coil spring machines, air spring machines, and CNC finishing machines for forging.
- Capacity expansion will be within existing land; no new land bank is required up to ₹500 crore revenue target.
- Air spring division capacity expansion of facilities and shed is underway, expected to complete in two months.
- Any further liquidity raising or market fund raising is not planned unless needed for a very significant new project.
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Margin guidance
Category 3- The company targets gross sales of Rs. 250 crores in FY25, up from around Rs. 150 crores in FY24, implying significant revenue growth.
- EBITDA margin improved to 15.34% in FY24, with management confident to maintain or improve margins in upcoming years.
- Profit after tax in FY24 grew by 79.42% to Rs. 12.99 crores, showcasing strong earnings growth momentum.
- New 6-tonne hammer installation expected to contribute Rs. 10-15 crores in FY25 and Rs. 50-60 crores in revenues from FY26 onwards, enhancing operating earnings.
- Management plans continuous capacity expansion post FY26 aiming for Rs. 500 crores gross sales by FY27, supported by incremental CAPEX of Rs. 10-20 crores to remove bottlenecks.
- EPS is expected to improve with volume growth and stable or expanding margins driven by product mix and new product introductions like air springs.
- No immediate dilution planned; liquidity enhancement only if a major growth project arises.
Order book
Yes- As of the start of FY25, Frontier Springs has a strong order book valued at approximately Rs. 150 crore.
- Orders are continuously flowing due to ongoing tendering by Indian Railways, with around 4-5 new tenders daily for coil springs, forgings, and air springs.
- The company has an order book of about Rs. 850 crore in hand encompassing coil springs, forgings, and air springs.
- Execution timeline for orders is generally about 45-60 days.
- The order inflow remains robust, with around Rs. 60-70 crore in orders typically maintained, but currently elevated to Rs. 150 crore, enabling steady revenue ramp-up.
- New orders continuously replenish the order book, ensuring sustained order pipeline and revenue generation.
- Air spring orders have grown, with approximately Rs. 18 crore in revenue last year and Rs. 7 crore in the last quarter of FY24.
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What Frontier Springs Ltd's management said in earlier quarters
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