Frontier Springs

Indian Railways remains Frontier Springs' primary customer, benefiting from the Union Budget 2026 allocation of ₹2.65 lakh crore as capital outlay. This investment directly fuels demand for the company's springs, coil springs, air springs, and forging components used in coaches, wagons, and locomotives. Management views the scaling of Indian Railways as a direct expansion of their addressable market.

Elevated steel prices in the latter half of FY26 created cost pressure. Frontier Springs mitigated this by negotiating favorable terms with vendors and focusing on high-value tenders, largely offsetting margin headwinds. For FY27, management aims to maintain margins between 23-24%, acknowledging potential moderation if steel prices remain firm, and is actively monitoring the situation.

FY26 marked significant operational achievements. The springs business experienced steady demand across freight, coaching, and locomotive applications, including the Vande Bharat Express. The forging division saw meaningful progress with the installation of a new 6-ton hammer, expanding capabilities for heavier forgings. Orders for components from this new hammer have begun, and some are approved for Vande Bharat trains. The air spring segment, a business built since 2022, ramped up production in FY25 and FY26, contributing meaningfully to revenue.

For FY26, revenue from operations grew 39.22% to ₹322.06 crores, surpassing the initial target. EBITDA increased 73.80% to ₹86.31 crores, with the EBITDA margin expanding 533 basis points to 26.80%. Profit after tax rose 76.88% to ₹61.31 crores, and EPS reached ₹51.07. Q4 FY26 was the strongest quarter, reporting ₹82.54 crores in revenue (up 17.7% YoY) and an EBITDA margin of 28.51%.

The company expanded capacities in both coil springs and air springs during FY26 to meet rising demand, with these investments now contributing to numbers. Operating at approximately 70% capacity, Frontier Springs plans ₹20-25 crores in CAPEX for FY27 across all three divisions to further increase capacity and modernize. Management targets 30% revenue growth for FY27, aiming for ₹500 crores in revenue, and anticipates an average 20-25% growth beyond FY27.

Frontier Springs holds an order book of ₹370 crores, providing revenue visibility for the next two and a half quarters. The company receives daily orders from Indian Railways, and larger orders (₹50-60 crores) are publicly disclosed. Management foresees no order scarcity from Indian Railways for the next 5-10 years, citing continuous demand for coaches, locomotives, and freight transportation in a high-population country.

The Failure Indication and Brake Application (FIBA) system has received basic approval from RDSO, with trials scheduled to commence. Following approximately six months of trials, the company expects to become a regular source, projecting ₹20-25 crores in revenue contribution from FIBA starting FY28. This indigenous system is anticipated to receive priority over imported alternatives, enhancing the company's competitive edge in this segment.