Frontier Springs hosted a conference call in May 30, 2024. In the conference call the company was represented by Kapil Bhatia, MD.

Key takeaways of the call

The company is confident of achieving a gross sales (not excluding taxes) of Rs 250 crore for FY25  amd for next year it will target a gross revenue of Rs 350 crore.

Strong start to the year, coupled with robust order book, positions the company well for sustained growth for this fiscal.    In FY25 the company expects Rs 80 crore from Coil Springs, Rs 70 crore from forgings and balance from air springs.  

Order book as end of March 31, 2024 stood at Rs 150 crore, which are expected to be executed over 6 months.   Order keep coming, there are 4-5 tenders for different coil springs and forgings daily from Indian railways.

The air spring division, which manufacture Air Spring suspension systems for LHB coaches for Indian Railways expect ramp up to happen in FY25. The company has already invested 7 crore of capex in this facility and expected to incur a further capex of Rs 5 crore.  Post proposed capex of RS 5 crore the potential of this facility is to generate Rs 120 crore. Current capacity of air spring division is good enough to meet 50% of Indian Railways requirement.  The further capex of Rs 5 crore is already done and the facility will be available in another 2 months.

Sales from air spring business was Rs 18 crore for FY24 and Rs 7 crore in Q4FY24

The ongoing modernization and expansion of the Indian Railways present significant opportunities, and the company is well-prepared to capitalize on these developments.

On track with the installation of   6-ton hammer, which is expected to begin commercial production by mid-Q2FY25? This new capacity will enable the company to produce higher tonnage forgings and cater to new industries, enhancing product offerings and margins. Expect this investment to start contributing to the  performance of the company from Q3FY25.  Capex on 6 tonne hammer capacity is Rs 4 crore and out of that the company has so far spent Rs 2.5 crore.  On full fledged capex the company is expected a revenue of Rs 60-70 crore next fiscal.  The company expect a revenue of about Rs 20  crore in current fiscal.  

Expect to sustain the Q4FY24 margin for entire FY25.

Expect air springs to give a good jump next year with more on boarding/approvals from OEMs. So with growth in all 3 business coil springs, air springs and forgings the company feels the revenue target of Rs 500 crore by FY26-27 is not a challenge.

With current capacity the company can touch a peak revenue of Rs 350 crore.  For reaching Rs 500 crore revenue the company has to invest further on capacity.  The company have enough land for a sales potential of RS 500 crore and the company will be adding machines as the gestation for additional capacity is about 6 months to address the bottleneck and expanding capacity.

No royalty payment for Contitech in case of air springs. But they are supplying rubber material for the air springs. The rubber material accounts for 40% of the cost and they earn from it.