Positives and Negatives of Frontier Springs Ltd shares:
Positives:
- Zero Debt.
- Consistent Growth.
- Quarterly Bull. Strong Quarterly result.
- Strong Balance Sheet.
Negatives:
- High Price to book.
Frontier Springs Ltd shares Target Price:
- BSE: 522195
- Market Price: 2292.
- Buy Range: 2150-2290.
- Medium Term Target (3-6 months): 2650. SL 2000.
- Long term target (2-3 years): 5000.
About Frontier Springs Ltd from Screener Website
Incorporated in 1981, Frontier Springs Ltd is mainly engaged in the production of L.H.B. Springs and Hot Coiled Compression Springs and Forging items for Wagon, Locomotives and Carriage
Key Points
Business Overview:
Company is a manufacturer of hot coiled compression springs, air springs and forging for wagons, railways, carriages and locomotives. Its springs are used on the fastest train in india – vande bharat express. Company’s products are ISO 14001:2015, RDSO and also International Rail Industry Standard (IRIS) certified, which enables it to directly export its products to other countries
Business Divisions:
a) Springs Division:
Company manufactures different kinds of Coil Springs of sizes from 10 mm to 65 mm wire thickness, with a maximum height of 1,000 mm
b) Forging Division:
FSL manufactures train parts such as Anti Roll Bar Assembly, Screw Couplings, Draft Gear Assembly and BSS Hangers
c) Air Spring Division:
Company signed an MoU with Contitech Germany to supply Air Springs suspension systems for LHB coaches for Indian Railways
Product Profile:
a) Air Springs for LHB coaches
b) Suspension Coil Springs for freight stock
c) Suspension Coil Springs for coaching stock
d) Suspension Coil Springs for diesel and electrical locomotives
e) TMCLH and VLH Coil Springs for the power sector
f) Forging components such as Brake Block Hanger, Knuckle Thrower, Top Follower and Wedge
Production Capacity:
Company has 2 plants, one each in Kanpur (Uttar Pradesh) and Poanta Sahib (Himachal Pradesh), with a total installed capacity of ~8000 ton per annum. It also has a forging
unit in its Kanpur plant, which has a capacity of 1200 TPA.
Clientele:
Chittranjan Locomotive Works, Banaras Locomotive Works, Frontier Alloy Steels,
Patiala Locomotive Works, BHEL, Titagarh, IRCTC, Texmaco, Rail Coach Factory, Integral Coach Factory, MCF.
Market Share:
Largest Supplier for coil springs to Indian Railways with ~50% market share. As per FY23, company’s market distribution stands at ~20% for wagons, ~40% for passenger coaches and 50% for locomotives
Revenue Breakup – FY23:
Sales of Products ~99%, Other Income ~1%
Order Book:
On January 6th 2024, company received a contract valued at Rs. 52.20 crores. It involves the supply of 894 sets of air springs.
Capex & Focus:
a) Company signed an MoU with Contitech Germany to suppy Air Springs to Indian Railways. Total Rs. 12 Cr Capex is planned out of which Rs. 7 Cr is already incurred. Ramp up expected by FY25.
b) Capex in Forging Division for 6 ton hammer to be installed and commence trial run by Q1FY25. Other products to be introduced after air spring plant is fully functional.
Change in Auditors:
M/s Sanjeevani Raizada & Co resigned as Statutory Auditors and was replaced by M/s Sanjay Nandini & Co on November 8th, 2023.
