⚡ At a Glance
Frontier Springs Ltd, a tiny Kanpur-based manufacturer of railway springs for Vande Bharat and other trains, has quietly become a smallcap rocket. With 42% ROCE, 173% profit growth in FY25, and a 5-year stock CAGR of 81%, it’s giving Bharat Forge and Schaeffler some serious metal fatigue. But is it too hot to handle at 56x P/E and 16x Book?
1. 🎯 Introduction – The “Rail” Multibagger No One Saw Coming
Back in 2019, this was a boring, illiquid counter with ₹83 Cr sales, ₹8 Cr PAT, and an ancient-looking website.
Fast forward to FY25:
- ₹231 Cr revenue
- ₹35 Cr PAT
- ₹4,900 stock price (up from ₹570 in 2020!)
- ₹92 Cr mega order from Indian Railways just landed
And suddenly… retail bros are whispering: “Yeh Vande Bharat ka thela hai kya?”
Let’s unspring this mystery.
2. 🏭 WTF Do They Even Do?
Core Biz: Springs for railways. Hot-coiled compression springs, LHB coil springs, air springs – the works.
📦 Customers:
- Indian Railways (majority)
- Vande Bharat express (direct parts used)
- Rail Coach Factories + export clients (thanks to IRIS & RDSO certification)
✅ Niche product
✅ Regulatory moat
✅ Approved vendor list = compounding ka license
Think of it like this: Boring product + Monopoly customer = Banger margins.
3. 📈 Financials Overview – Profits Jump Like Springs
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 77 | 84 | 107 | 135 | 231 |
| EBITDA (₹ Cr) | 13 | 12 | 13 | 21 | 50 |
| PAT (₹ Cr) | 8 | 8 | 7 | 13 | 35 |
| OPM (%) | 17% | 15% | 12% | 16% | 21% |
| EPS (₹) | 19.8 | 19.1 | 18.4 | 32.9 | 88.0 |
🔥 FY25 PAT up 173% YoY.
📈 3-Year CAGR in EPS = 66%
This is what analysts call “Junction breakout.”
4. 💸 Valuation – Is It Cheap, Meh, or Crack?
- Market Cap: ₹1,946 Cr
- TTM EPS: ₹88
- P/E: 56x
- Book Value: ₹315
- P/B: ~15.7x
🚨 That’s not cheap. It’s bordering on Bosch-level fantasy.
🧮 Fair Value Range:
Let’s bake in FY26 PAT = ₹45 Cr (modest 28% growth), and fair P/E = 35x
➡️ Market Cap = ₹1,575 Cr
➡️ FV Range = ₹3,700 to ₹4,200
Current Price = ₹4,938 = Slightly Overbaked
But… it’s still riding the Vande Bharat hype train 🚅
5. 🧂 What’s Cooking – Orders, Capex, and Railways FTW
📌 June 2025: ₹92.6 Cr mega order for Air Spring Assemblies
📌 FY25 Order Book: ~₹200 Cr+
📌 Exports expected to rise, thanks to IRIS global compliance
📌 No major capex, but capacity utilization >90%
Basically, Railways told them:
“Tayyar ho jao, aur bhejo maal. Aur tez. Aur sasta.”
6. 🧾 Balance Sheet – How Much Debt, How Many Dreams?
| Metric | FY25 |
|---|---|
| Equity Capital | ₹4 Cr |
| Reserves | ₹120 Cr |
| Borrowings | ₹6 Cr (tiny) |
| Total Assets | ₹169 Cr |
| Net Block + CWIP | ₹57 Cr |
Company is nearly debt-free.
Net worth is up 4x in 5 years.
Minimal capital employed for this kind of profit = finance professors crying happy tears.
7. 💰 Cash Flow – Sab Number Game Hai
| FY25 |
|---|
| CFO |
| CFI |
| CFF |
| Net Cash |
No red flags. This machine is greased well.
8. 📊 Ratios – Sexy or Stressy?
| Ratio | FY25 |
|---|---|
| ROCE | 41.8% 🧨 |
| ROE | 32.5% ✅ |
| OPM | 21% 🚂 |
| Inventory Days | 126 |
| Debtor Days | 61 |
| CCC | 92 Days |
This is what a well-oiled monopoly supplier looks like.
9. 💥 P&L Breakdown – Show Me the Money
- FY25 Revenue: ₹231 Cr
- COGS + OpEx: ₹182 Cr
- Operating Profit: ₹50 Cr
- PAT: ₹35 Cr
- EPS: ₹88
- Dividend: ₹2 (meh, they’re reinvesting)
Zero fluff. Just nuts-and-bolts profit.
10. 🏁 Peer Comparison – How Does It Stack Up?
| Company | ROCE | P/E | PAT Margin | Market Cap |
|---|---|---|---|---|
| Frontier Springs | 42% | 56x | 15.1% | ₹1,946 Cr |
| Schaeffler India | 25% | 61x | 12.1% | ₹61,916 Cr |
| Bharat Forge | 13% | 61x | 6.6% | ₹61,405 Cr |
| Bosch | 21% | 47x | 11.1% | ₹95,369 Cr |
Frontier is delivering better margins and returns than giants, but at a small scale.
So yes, valuations are punchy, but the business isn’t bluffing.
11. 🧠 Miscellaneous – Shareholding, Promoters
- Promoters: 51.76% (stable)
- Public: 48.24%, rising retail interest
- Shareholders: 9,139 (doubled in 2 years)
- No FIIs or DIIs (yet)
👀 Keep an eye if mutual funds enter this party. Valuation will jump faster than a spring.
12. 🧨 EduInvesting Verdict™
“This ain’t your average railway parts company. This is the Vande Bharat VIP supplier – riding monopoly margins, nearly debt-free, and springing profits like a trampoline.”
✅ Monopoly-ish niche in railway springs
✅ Razor-sharp margins & ROCE
✅ Clean balance sheet, strong order visibility
🚨 Valuation is frothy. P/E 56x isn’t a joke.
🚨 Low float, retail frenzy = high risk
🎯 FV Range = ₹3,700 to ₹4,200
📌 Wait for results + price cool-off
📌 Or ride the railway theme with stops along the way
✍️ Written by Prashant | 📅 July 2, 2025
Tags: Frontier Springs, Railway Stocks, Auto Components, Vande Bharat Suppliers, ROCE Kings, EduInvesting
