Authors: Ajay Singh Rajput [Responsible for Research and Manuscript ]

Date 13 feb 2025

Industry Overview
The Indian railway market is anticipated to become the third-largest globally, with a 10% share of the global market in the
next 5 years.
The total value of projects included in the budget is approximately ₹4.6 lakh crore. Which includes ₹2.52 lakh crore in
budgetary support for year 2025 – 2026. Comparison 6Lack Cr for defence
National Rail Plan (NRP): The Indian government has laid out an ambitious National Rail Plan (NRP) with a vision to increase
the share of railways in freight transportation from the current 26% to 45% by 2030
Indian Railways aims for 100% electrification
The government is emphasizing a shift to LHB coaches, which use air springs, rather than the older conventional rail bogies
which use coil springs
The allocation for safety measures is set to increase from ₹1.14 lakh crore to ₹1.16 lakh crore
There has been a push to convert 40,000 conventional rail bogies to ‘Vande Bharat standards,’ which requires upgrading to
air springs
The Indian Railways has been making significant investments in infrastructure, including tracks, locomotives, and coaches.

Industry Challenges:
Declining Share in Freight Transport: Falling from 85% in 1951 to less than 26% in 2025.

Capacity Constraints and Infrastructure Limitations: Despite increasing its running track length, Indian Railways faces
significant capacity constraints, limiting its ability to meet growing transportation demands and compete with other
modes

Financial Performance: The railway's financial health has been deteriorating, as evidenced by its increasing operating
ratio. The Indian Railways (IR) is facing a growing concern related to rising debt

Freight Revenue Concentration: Freight revenue heavily depends on coal, which accounted for half of the revenue and
45% of volume in the 2024-2025 estimates. The government’s shift toward renewable energy threatens future coal
demand.

Project Delays: The Western Dedicated Freight Corridor (DFC), which aims to connect the northern and western regions
to major ports, has faced delays

Slow Freight Train Speeds: Slow freight train speeds have hindered revenue growth.

Balancing Affordability and Profitability

Maintenance and Infrastructure: The Railways faces challenges in maintaining infrastructure

Safety: Indian Railways must continue to emphasize the training of staff and upgrading training infrastructure to
enhance safety and reduce accidents

Company overview
Frontier Springs Limited began as a family business in 1968, when it started manufacturing engineering components and
running a truck repair workshop. Initially, the company focused on producing leaf springs for trucks and established
partnerships through a distribution network across Uttar Pradesh, Madhya Pradesh, and Bihar
 In 1981, Frontier Springs Limited was officially incorporated. The company began providing services to state transport
corporations, such as MSRTC and GSRTC3. At this time, Frontier Springs manufactured leaf springs and laminated bearing
springs for both automobiles and railways, For several years, Frontier Springs enjoyed a monopoly in its business, but as
competition increased from state transport corporations, the company began to diversify.

In 1991, Frontier Springs transitioned from manufacturing leaf springs to hot coiled springs for the Indian Railways,
establishing this as their core business

Current Business detail

Frontier Springs Limited is a manufacturer of components for the rail transport system. The company specializes in
manufacturing hot coiled compression springs, air springs, and forgings for wagons, railways, carriages, and locomotives.
They are also involved in the production of Leaf Springs and Laminated Bearing Springs for automobiles and railways.

Frontier Springs has two manufacturing facilities located in Kanpur, Uttar Pradesh, and Poanta Sahib, Himachal Pradesh. The
company also has a fully equipped laboratory.

Frontier Springs is certified by the International Rail Industry Standard (IRIS). important for Frontier Springs Limited
because it enables the company to directly export its products to international markets.

Product Segment

Springs Division: The company manufactures hot coiled springs for the Indian Railways, including various coil springs
designed to optimize space, reduce fatigue, and decrease weight. They produce springs with wire thicknesses ranging from
10 mm to 65 mm, and heights up to 1,000 mm11. The springs are crafted from chrome molybdenum and chrome silicon
steel rods. The company previously manufactured leaf springs for trucks

HOT Coiled Spring Air Spring

 Air Spring Division: Frontier Springs manufactures air spring suspension systems for LHB coaches. They collaborate with
Contitech Germany for air springs used in LHB coaches and the Vande Bharat Express The company is focused on
indigenizing its air spring production, with over 70% of the components currently being manufactured in India.

Forging Division: This division produces essential train parts such as Anti Roll Bar Assemblies, Screw Couplings, Draft Gear
Assemblies, and BSS [Link] facility in Kanpur uses hammers of varying capacities, allowing it to shape metal
components ranging from 100 grams to 80 kilograms.

Market Share: The company's market share distribution is approximately 20% for wagons, 40% for passenger coaches, and
50% for locomotives.

Growth Trigger
• The company expects to generate around ₹70 crore from forgings in FY25
• Railway Budget : ₹2.64 lakh crore in the budget Capex
• The government's plan to convert 40,000 conventional rail bogies to Vande Bharat standards will create significant
demand for air springs
• The railways plan to increase production from 6,000 passenger coaches to 10,000 passenger coaches
• Expanding Customer Base: Metro Coaches: Frontier Springs is also in discussion with major metro coach
manufacturers like Siemens, Bombardier, and Alstom to supply air springs for metro coaches, leveraging the
collaboration with Contitech
• "Make in India" Initiative
• Strong Order Book in FY24: In a prior discussion, the company stated it had an order book of approximately ₹850
crore. And Sep 2025 Booked for 6-8 Months operating at 75-80% capacity.
• Forgings: The company sees significant potential for growth in its forging business.
o They expect that this will contribute to their financials by quarter 4
o The forging segment is projected to contribute 45% of the company's revenue at the ₹500 crore level

MOAT
• The company has a long-standing partnership with Indian Railways
• RDSO Approvals: The company has developed numerous products as per the latest specifications of the RDSO
• Certified by the International Rail Industry Standard (IRIS)
• Market share 50%
• Make in India Frontier Springs is well-positioned to capitalize on the Indian government's "Make in India" initiative
• Technical Collaboration with Contitech Germany for the manufacturing and supply of air springs to the Indian
Railways , Contitech earns revenue through the sale of the rubber component to Frontier Springs.
• Product Diversification: Frontier Springs has diversified its product portfolio to include coil springs, forgings, and air
springs.
 • Limited Competition in Key Segments. While there are several small manufacturers of wagon springs, Frontier
Springs is one of only a few approved suppliers of springs for passenger coaches and locomotives. For air springs,
the company is one of only three approved suppliers to Indian Railways

Key competitors in the industry include:

• GV Spring in Dehradun and Abok Spring in Jaipur . GV Spring and Abok Spring do not have the capacity to supply
the whole market, which gives Frontier Springs a larger market share.
• The wagon spring market is competitive, with many small players, but prices have climbed due to high demand and
limited supply
• Emerging Competitors: While the sources indicate that there are no major competitors in the coil spring market, a
new competitor, Mishra Dhatu Nigam, a government entity, has recently received approval from the RDSO

Overall Growth Targets

• FY24 : ₹135.42 crore revenue.
• FY25 9Month : 162 Cr
a. FY25 Revenue: The company is targeting a gross revenue between ₹240 to ₹250 crore
b. The company expects to generate the following from each division in FY25:
c. Coil springs: ₹80-90 crores
d. Forgings: ₹60-70 crores
e. Air springs: ₹90 crores
• FY26 Revenue: While initially targeting ₹300 crores for FY26
• Revenue Target: Frontier Springs aims to achieve a top-line revenue of ₹500 crore by 2027.
• Sustained Growth: The company expects to maintain a growth rate of 20-25% annually
• FY26 Revenue: While initially targeting ₹300 crores for FY26. The company is being conservative.
• FY27 : Revenue Target 500 Cr
• Sustained Growth: The company expects to maintain a growth rate of 20-25% annually

Valuation Metrics
Mcap 894
Valuation matrix Current Feb 2025 TTM FY 25 E FY 26 E FY 27 E
Sale 205 240 300 500
EBITDA 40 48 60 100
PAT 28 32.64 40.8 68
PE ratio 33.3 27.6 22.1 13.2
Price to sale 4.3 3.75 3 1.8
EV to EBITDA 22.2 18.75 15 9

Customers
It manufactures Coil Springs for wagons, coaches, and locomotives for the Indian Railways and other clients like
Texmaco Limited, Crompton Greaves, BHEL, Titagarh Railways, MCF, Chittranjan Locomotive Works, Banaras Locomotive
Works, Frontier Alloy Steels Ltd.
Financial History :
Consistency in numbers

Risks
• Raw Material Cost Variation
• Competitive Landscape : Hot coiled spring is commodity product may face pricing issue
• Single customer : Indian Railway
• Gov Policy risk
• High Management renumerations
• High Related party transaction

How to track business

Follow concall and requirement from customers like Texmo , Titaghar
Peer analysis

Fronteir Texmo
Sprin Rail Titaghar BHEL
EBITDA margin 20.3 10.5 12.7 12.3

Return Ratio
PAT Margin 10% 3% 7% 7%
Cash Conversion Cycle 111 98 75 416
Working Capital Days 76 191 65 266
ROCE % 20.5 10.6 25 15.2
PEG 3.9 2.67 0.45 1.32
Valuation Ratio

Asset Turnover Ratio 1.16 0.93 1.47 0.76

Enterprise value by Sales 4.51 1.37 2.89 3.24
Percentage of sales as Receivables
% 8.78 20.6 18.5 37.4
EVEBITDA 22.2 13.1 22.8 26.3
Stock P/E 33.3 23.6 38 45.9
Growth Sales growth 3Years 20.7 27.5 36.3 4.07

Management analysis
• Family-Led Management: The company is significantly influenced by the Bhatia family, with several family members
holding key Position
• Kundan Lal Bhatia as Chairman cum Managing Director. Electrical Engineer and 49 Work Exp
• Kapil Bhatia as Managing Director. He is MBA Degree and 27 years of experience in Management and Finance
• Neeraj Bhatia as CFO and Whole-Time Director. He has [Link] degree and 25 years of experience in Marketing and
Finance
• Mamta Bhatia as Whole-Time Director, with 13 years expertise in Marketing and Finance. She has B.A. and an MBA
degree
• Manju Bhatia has a B.A. degree and she is Whole-Time Director, overseeing overall administration and finance.
• This structure indicates a closely-held management style with considerable family involvement.
• Board Composition: The Board includes both Executive (Promoter) Directors and Independent Directors. This mix
aims to maintain a balance between governance and management. The company is committed to sound corporate
governance practices.
• Succession Planning: The re-appointment of Smt. Mamta Bhatia and Smt. Manju Bhatia as Whole-Time Directors
indicates a focus on continuity and leveraging their experience.