🔵 At a Glance
Frontier Springs, a tiny auto-component firm supplying critical spring systems to Indian Railways (including Vande Bharat!), just posted a 173% YoY profit growth. With ROCE of 42%, 33% ROE, and TTM EPS of ₹88, this stock is up 190% in a year. But with a 52x PE, is this a train you should board—or wave from the platform?
1. 🚂 Introduction with Hook
While everyone’s busy chasing Tata Motors and Bosch, here’s a ₹1,800 Cr company literally holding Indian Railways together.
Yes, springs. Not the water ones. The coiled steel kind under Vande Bharat’s belly that make sure you don’t fly out of your seat at 180 km/h.
And guess who makes them?
🎯 Frontier Springs Ltd, a tiny firm with big torque.
2. 🔩 Business Model – WTF Do They Even Do?
- 🚆 Core Products:
- Hot coiled compression springs
- LHB springs (used in high-speed trains)
- Air Spring Assemblies
- Railway forging components
- 🛠️ Application Areas:
- Wagons
- Coaches (LHB and ICF)
- Locomotives
- ✅ Certifications:
- ISO 14001:2015
- RDSO approved
- IRIS compliant – enables direct exports
They’re not Tier 3. They’re OEM approved suppliers to Indian Railways factories.
3. 💸 Financials Overview – Profit, Margins, ROE, Growth
| Metric | FY25 |
|---|---|
| Revenue | ₹231 Cr |
| Net Profit | ₹35 Cr |
| ROE | 32.5% |
| ROCE | 41.8% |
| OPM | 21% |
| EPS | ₹88 |
- 🧨 TTM Profit Growth: +173%
- 📈 3-Yr Revenue CAGR: 40%
- 🧾 Margins have climbed from 12% to 21% in 3 years
This is not your typical components maker. These margins are German-grade.
4. 📊 Valuation – Is It Cheap, Meh, or Crack?
| Metric | Value |
|---|---|
| CMP | ₹4,598 |
| PE Ratio | 52.3x |
| Book Value | ₹315 |
| PB Ratio | 14.6x |
| Mcap | ₹1,811 Cr |
🎯 Fair Value Range: ₹3,600 – ₹4,200
Why the cap?
- While growth is hot, PE >50x leaves no room for hiccups
- PB of 14.6x is nosebleed unless you’re a software firm
- Still, high ROCE & rising EPS justify premium up to a point
5. 🧨 What’s Cooking – News, Triggers, Drama
- 🚅 Received ₹92.6 Cr order for Air Spring Assemblies from Indian Railways in June 2025
- 📞 Analyst calls hint at new export opportunities in Europe
- 🛠️ Expanding capacity to meet LHB coach demand
- 🎯 8 straight quarters of revenue and profit growth
Trains are on a tear. And Frontier is clamped to the axle.
6. 🏦 Balance Sheet – How Much Debt, How Many Dreams?
| Metric | FY25 |
|---|---|
| Total Assets | ₹169 Cr |
| Net Worth | ₹124 Cr |
| Borrowings | ₹6 Cr |
| D/E Ratio | ~0.05x |
💥 Almost debt-free
🧱 Assets up 1.5x in 2 years
🧰 Capex likely funded by internal accruals
Rock-solid balance sheet. Tight, efficient, minimal bloat.
7. 💸 Cash Flow – Sab Number Game Hai
| Year | CFO | Capex | FCF Estimate |
|---|---|---|---|
| FY23 | ₹10 Cr | ₹10 Cr | ~₹0 Cr |
| FY24 | ₹12 Cr | ₹10 Cr | ₹2 Cr |
| FY25 | ₹22 Cr | ₹20 Cr | ₹2 Cr |
They’ve stepped up both earnings and reinvestments. And still staying free cash flow positive.
8. 📈 Ratios – Sexy or Stressy?
| Ratio | FY25 |
|---|---|
| ROCE | 41.8% |
| ROE | 32.5% |
| OPM | 21% |
| Debtor Days | 61 |
| Inventory | 126 days |
| Payables | 94 days |
| CCC | ~92 days |
Ratios are insane. But watch the working capital cycle—it’s still springy.
9. 📉 P&L Breakdown – Show Me the Money
- Revenue: ₹231 Cr
- Operating Profit: ₹50 Cr
- Net Profit: ₹35 Cr
- EPS: ₹88
- PAT margins: ~15%
Not a seasonal business. Orders are long-term. And Indian Railways is the ultimate client—you never get ghosted.
10. 🚅 Peer Comparison – Who Else in the Game?
| Company | PE | ROCE | ROE | OPM | Mcap (₹ Cr) |
|---|---|---|---|---|---|
| Schaeffler India | 60x | 25.7% | 19.2% | 18% | ₹61,000 |
| Bharat Forge | 62x | 13.1% | 12.3% | 18% | ₹62,000 |
| Endurance Tech | 45x | 18.2% | 15.5% | 13% | ₹37,000 |
| Frontier Springs | 52x | 41.8% | 32.5% | 21% | ₹1,811 |
Frontier is punching at bluechip metrics in a microcap body.
11. 🕵️ Miscellaneous – Shareholding, Promoters
| Category | Mar 2025 |
|---|---|
| Promoters | 51.76% |
| Public | 48.23% |
| FII / DII | 0% |
| No. of Holders | 9,139 |
- Fully retail discovered
- No dilution or pledging
- FIIs still absent = re-rating possible on institutional coverage
12. 🧠 EduInvesting Verdict™
Frontier Springs isn’t just a railway stock. It’s a textbook case of smallcap alpha with largecap discipline.
- 📈 Earnings? Exploding.
- 💸 Margins? Expanding.
- 📉 Valuation? Pricey—but not undeserved.
📍 Verdict:
🛤️ “This spring isn’t coiling back anytime soon—but the bounce is now priced in.”
✍️ Written by Prashant | 📅 June 28, 2025
Tags: Frontier Springs, Vande Bharat suppliers, railway stocks India, LHB coaches, auto components, high ROCE stocks, smallcap multibaggers
