Frontier Springs — Q4 FY25 earnings call

Call held 31 May 2025

Management summary

Frontier Springs delivered its highest ever quarterly performance in Q4 FY25, driven by strong demand from Indian Railways across its coil springs, forging, and air springs divisions. The company achieved significant growth in revenue and profitability for both the quarter and the full year, with improved EBITDA margins. Management expressed optimism for future growth, backed by a robust order book, planned capacity expansion, and a strategic focus on high-margin value-added products, particularly in the context of ongoing railway modernization.

Highlights

  • Q4 FY25 Revenue from operations stood at Rs. 70.08 crore, marking a robust growth of 58.75% YoY.

  • Q4 FY25 EBITDA was Rs. 16.75 crore, up 125.71% YoY, with EBITDA margin improving to 23.90%.

  • Q4 FY25 Profit after tax was Rs. 11.66 crore, a strong increase of 130.89% YoY.

  • Full Year FY25 Revenue from operations reached Rs. 231.34 crore, a 70.84% increase over FY24.

  • Full Year FY25 EBITDA was Rs. 49.66 crore, up 139.10% YoY, with EBITDA margin of 21.47%.

  • Full Year FY25 Profit after tax stood at Rs. 34.66 crore, up 166.93% from Rs. 12.99 crore in FY24.

  • Company set ambitious revenue targets of Rs. 375 crore for FY26 and Rs. 500 crore for FY27.

  • Planned capex of Rs. 15 crore for FY26 to enhance capacities across all divisions.

Key financials

2 periods

Q4 FY25

  • Revenue
    ₹70.08 Cr
    YoY +58.8% QoQ +20.3%
  • EBITDA
    ₹16.75 Cr
    YoY +125.7% QoQ +34.3%
  • EBITDA Margin
    23.9%
  • PAT
    ₹11.66 Cr
    YoY +130.9% QoQ +33.6%

FY25

  • Revenue
    ₹231.34 Cr
    YoY +70.8%
  • EBITDA
    ₹49.66 Cr
    YoY +139.1%
  • EBITDA Margin
    21.5%
  • PAT
    ₹34.66 Cr
    YoY +166.9%

What they filed

Q1 FY27: revenue up 4.0%, net profit down 20.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue52 58 70 75 83 +60%81 +40%83 +19%78 +4%
EBITDA11 12 17 20 22 +100%20 +67%24 +41%19 −5%
Net profit7 9 12 15 16 +129%14 +56%17 +42%12 −20%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Coil Spring (FY25)
    ₹150 Cr Revenue150-170 crores Revenue Range
  • Air Spring (FY25)
    ₹125 Cr Revenue
  • Forging (FY25)
    — RevenueBalance of total revenue text Description

Order book

high confidence

Total value

₹250 Cr

as of 2025-05-31 range

Execution

Around 90 to 100 crores every quarter

Pipeline

L1 awaiting loa

Orders in pipeline expected to materialize by June 30th, 2025

The company has a strong order book and pipeline, with current orders in hand of Rs. 200-250 crores and an additional Rs. 50 crores expected by June end, supporting the FY26 revenue target.

Source: Q&A

Capital allocation

high confidence
  • Capex ₹15 Cr
    • Capacity expansion for Coil Spring ₹5 Cr
    • Capacity expansion for Air Spring ₹4 Cr
    • Capacity expansion for Forging ₹3 Cr
    • Testing machines and production machines
    We plan to invest additional 15 crore in plant and machinery over the coming year to further enhance our capacities and fully capitalize on an opportunity presented by the ongoing modernization of Indian Railway. ... Coil spring may require another 5 crores-6 crores, air spring required another 4 crores-5 crores and forging require another 2-3 crore. So it's like that. Some testing machines, some production machines like this.
  • Liquidity Cash ₹30 Cr Cash on books as of March 31, 2025, with a portion invested in mutual funds and equity market.
    that we have 25 crores to 30 crores on books as on 31st March '25. What I understand that we have been putting this money into equity and all if I am not right, so any conservative management Would be looking at fixed income product anything that you would like to add on that side? Why are we taking our calls on to equity with the cash that we are having in books?

Guidance & targets

Revenue

  • Gross Revenue Revenue · FY26 · High confidence Rs. 375 crore
    We have set ambitious target of achieving Rs. 375 crore in gross revenue for FY'26

    — Kapil Bhatia

  • Gross Revenue Revenue · FY27 · High confidence Rs. 500 crore
    and Rs. 500 crore for FY'27.

    — Kapil Bhatia

Profitability

  • EBITDA Margin Profitability · FY26 · High confidence 21-22%
    Yes, I'm 100% sure, this is Kapil, that we'll be able to achieve this and we are trying to improve on this also.

    — Kapil Bhatia

  • EBITDA Margin Profitability · FY26 · Medium confidence 22-23%

    From 21% today

    I am saying that we will definitely maintain 21% but we are trying to get more value added items and more value added this thing for forging also and for some other product and we are trying to go up from 21% to 22%-23%.

    — Kapil Bhatia

Capex

  • Investment in Plant & Machinery Capex · coming year (FY26) · High confidence Rs. 15 crore
    We plan to invest additional 15 crore in plant and machinery over the coming year to further enhance our capacities

    — Kapil Bhatia

Capacity

  • Air Spring Production Capacity Capacity · coming time · High confidence 300-350 coaches

    From 200 coaches today

    Air spring we are already doing almost 200. We are increasing our capacity from 200 coaches to 300-350 coaches in coming time.

    — Neeraj Bhatia

Market Share

  • Air Spring Market Share Market Share · this year and maybe next year · Medium confidence 30%

    From 25% today

    We are already having almost 25% of market share. So we are trying to go up to 30% this year and maybe next year.

    — Kapil Bhatia

Market Size

  • Defense Sector Market Size (specific item) Market Size · per year · High confidence Rs. 60-70 crores
    I think that the item which we are concentrating is, the market size will be around 60 crores to 70 crores per year, the item which we are concentrating on.

    — Kapil Bhatia

What to watch in Q1 FY26

EBITDA Margin Improvement

FY26
Current 21.47% (FY25), 23.90% (Q4 FY25)
Target 22-23% (FY26)

Why it matters

Sustaining and improving margins is key to profitability, especially with commodity price recovery.

I am saying that we will definitely maintain 21% but we are trying to get more value added items and more value added this thing for forging also and for some other product and we are trying to go up from 21% to 22%-23%.

Risks & concerns

  • Competition in Forging Segment

    low

    Management noted 'big competition' in the forging segment, leading to a strategic focus on high-margin forging products.

    And yes, there is a opportunity to go into the defense and mining industry where we are already exploring the high value added forging because forging's demand is always there, but there is a big competition also. So we are concentrating only on high margin forging.

    Management acknowledged

Q&A highlights

8 direct
CRISIL Credit Rating Report Direct
Point number one, in case if the limits that we are using are beyond 50 Cr. then we are required to take the bank ratings. In our case, the exposure is far less, so we are not required to take the ratings. Secondly, if you haven't read the top heading, it clearly states that we have already withdrawn the rating.

Analyst raised a concern about a negative CRISIL report, which management clarified was due to low exposure not requiring ratings and that the rating was already withdrawn.

Asked by Priyanshu Jain

EBITDA Margin Sustainability and Improvement Direct
I am saying that we will definitely maintain 21% but we are trying to get more value added items and more value added this thing for forging also and for some other product and we are trying to go up from 21% to 22%-23%.

Analyst questioned the sustainability of high margins, and management confirmed confidence in maintaining and improving them through focus on value-added products.

Asked by Priyanshu Jain

Capacity Utilization and Expansion Direct
In some areas, we are doing almost 100% capacity utilization. That's why we have kept another Rs. 15 crore for capacity expansion as the demand is there. So where we have a bottleneck, are increasing our capacity, which order has already been placed and things are already on pipeline. So overall, I think we are using around 60% of capacity in some areas. In some areas it's 100%.

Analyst inquired about current capacity, and management detailed the utilization levels and the rationale for the planned capex to address bottlenecks.

Asked by Priyanshu Jain

Railway Wheel Set Supply and Steel Price Impact on Margins Direct
As far as the railway wheel sets are concerned, railway has also increased their capacity to manufactures. They have started a new plant Raebareli for making more wheels for railways other than they have an old factory in Bangalore, a railway factory. And they are importing. And I think now India is almost sustainable as far as wheels are concerned. So I don't see any problem... As far as margins are concerned, we are trying our best to hold 21% but we are confident that because of the demand and other thing we will be able to improve on the margin at least 1% to 2% more.

Analyst raised concerns about potential supply chain issues and commodity price volatility, which management addressed by highlighting increased domestic manufacturing capacity and their strategy to improve margins.

Asked by Garvit Goyal

Order Book vs. FY26 Revenue Target Direct
Actually, railway tenders keep on going on every year. So it takes 2 to 3 months to finalize the tender. So these are the present position. But there are other almost Rs. 100 crores-Rs. 150 crore tenders are in pipeline which are going to open this year. by the end of year, we'll able to do that. So we are quite comfortable that we are able to achieve 375 crores.

Analyst questioned the feasibility of the FY26 revenue target given the current order book, prompting management to explain the continuous nature of railway tenders and ongoing pipeline conversion.

Asked by Garvit Goyal

Q4 Margin Spike Direct
Sir, as I have already told in my opening remarks that we are concentrating on good value-added items only. We are not using our capacity for the low value added item and we have a good number of orders with the high value addition. So we are capitalizing on those first and then with that we know that what we are going to achieve. The average will be 22%-23% this year also.

Analyst sought clarification on the exceptionally high Q4 margins, and management attributed it to a strategic focus on high-value added products.

Asked by Garvit Goyal

Conservatism of FY26-27 Guidance Direct
Yes, we are little bit conservative but let's see what happens. Although we are quite sure that we may cross 500 Cr. in 27 but we are little conservative giving numbers because we don't want to fail, we want to improve on those numbers. So we are giving little bit conservative numbers. That is true.

Analyst questioned if the ambitious revenue targets were conservative, and management confirmed they are, indicating potential for upside.

Asked by Ashish Soni

Delay in 6-ton Hammer Commercialization Direct
There is always because when you are setting up a new plant there is always a teething trouble and the new hammer which has been installed is got delayed, not 6 months but almost 9 to 10 months because of the Ukraine war because we have to bought a hammer from the other country where the shipping was there and it was a 200 tons weight hammer and the shipping was not able to do that because of the Ukraine-Russia war because it was coming from that end.

Analyst questioned a past delay in a key capacity expansion, which management explained was due to external factors (Ukraine war) and confirmed is now resolved and operational.

Asked by Mahesh Atal

3 min read 8 chapters

Detailed narrative

Strong Q4 and FY25 Financial Performance

Frontier Springs reported its highest ever quarterly performance in Q4 FY25, with revenue from operations reaching Rs. 70.08 crore, a 58.75% increase YoY. EBITDA for the quarter grew by 125.71% YoY to Rs. 16.75 crore, leading to an improved EBITDA margin of 23.90%. For the full year FY25, revenue stood at Rs. 231.34 crore, up 70.84% from FY24, and PAT increased by 166.93% to Rs. 34.66 crore, reflecting robust operational achievements.

Operational Excellence and Segment Growth

The company witnessed strong execution across all core business divisions. The coil spring division saw healthy demand from Indian Railways, driven by increased production of LHB coaches and locomotives. The 6-ton hammer in the forging division was successfully commercialized, despite initial delays due to the Ukraine war, and is now contributing to high-margin forging. The air spring division experienced a significant boost from ongoing modernization initiatives by Indian Railways, securing firm orders and clear visibility for sustained growth.

Indian Railways Modernization Opportunity

The Indian Railways sector presents significant growth opportunities, supported by the Union Budget 2026's record capital outlay of Rs. 2.65 lakh crore. Major procurement plans, including wagons, Vande Bharat, and metro projects, create a strong demand pipeline for Frontier Springs' products. The company is well-positioned to benefit from these initiatives, leveraging its long-standing relationships and quality standards.

Ambitious FY26 and FY27 Growth Outlook

Frontier Springs has set ambitious revenue targets, aiming for Rs. 375 crore in gross revenue for FY26 and Rs. 500 crore for FY27. This growth is underpinned by a positive momentum from FY25, strong demand visibility across all segments, and planned investments. Management considers these targets conservative, indicating potential for even higher achievements.

Strategic Focus on EBITDA Margin Improvement

The company is committed to sustaining and improving its EBITDA margins, targeting 21-22% for FY26 and striving for 22-23%. This will be achieved by focusing on high-margin value-added products, particularly in the air springs and forging segments, and optimizing operational efficiency. The Q4 FY25 margin of 23.90% reflects the success of this strategy.

Order Book and Execution Visibility

As of May 31, 2025, the company's order position stands at Rs. 200-250 crore, with an additional Rs. 50 crore in pipeline expected by June 30, 2025. This robust order book provides strong visibility for the coming quarters, with an estimated execution rate of Rs. 90-100 crore per quarter, supporting the FY26 revenue target of Rs. 375 crore.

Capacity Expansion and Utilization

Frontier Springs plans to invest an additional Rs. 15 crore in plant and machinery during FY26 to enhance capacities across all three divisions. Current capacity utilization is around 60% overall, with some areas operating at 100%. The capex will address bottlenecks and increase air spring production capacity from 200 coaches to 300-350 coaches, ensuring the company can meet growing demand.

New Market Exploration in Defense and Heavy Engineering

The company is actively exploring new high-value markets for its forging products, including the defense and heavy engineering sectors (e.g., JCB, L&T). While the defense sector requires a 3-4 month approval process, management sees a market potential of Rs. 60-70 crore per year for specific items and is already in discussions to penetrate these segments.

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