Frontier Springs - Rs.16.00

Incorporated in 1981 and promoted by Mr. K. L. Bhatia, Frontier Springs Ltd. (FSL) belongs to the small Kanpur based Frontier group which has over 30 years of experience in the business of automobile & railway suspension parts like U-bolt, center bolt, coil springs, leaf springs, centre pivots, side assemblies, cast steel brake beams, buffer components, buffer assemblies, coupler components metal bonded etc. Out of these products Suspension springs, Leaf springs and Coil springs are made by FSL. The range of application of these springs varies from rail rolling stock to passenger cars. It also makes heavy and light hot coil springs for earth moving equipments, boiler plants etc. Apart from the Railways being a major customer, its clientele includes Ford, Opel, Daimler, BMW, Mercedes, Tata Motors, Texmaco, Kalyani Brakes, Central Ordinance Depot, Sunflag Industries, Usha Martin etc. Moreover its products are also exported to the UK, USA, Holland, Australia, Netherland and South East Asian countries. In short, it has a very good quality and design reputation both in India and abroad.

FSL’s manufacturing facility is located at Rania in Kanpur, UP, with an installed capacity of 10,800 MTPA. In order to obtain better space utilization, more fatigue life and weight reduction, different types of springs are manufactured at its plant. Variable load rates as well as fixed load rate coil springs are manufactured by high quality chrome vanadium and chrome silicon steel rods which are duly crack detected and epoxy powder coated. Incidentally, the group companies Frontier Alloy Steels and Frontier Metaprod help FSL get regular supply of raw materials thus giving it the much needed cost-efficiency advantage. Recently, it set up a new assembly line for the manufacture of heavy and light-coiled springs by importing the plant from Cogan Constructions, USA. The commercial production has already started and is expected to contribute an additional Rs.12 cr. of revenue per year, which is quite substantial for FSL. The company plans to further expand its Leaf Spring capacity as it is expecting some big order from a large UK based trailer manufacturer. Moreover, it has decided to diversify into the business of Air Suspension Spring, which has been indigenously developed. FSL has already engaged the services of M/s KPS Consultants and Impex Private Ltd., New Delhi primarily to explore the lucrative Technical Know-how and collaboration with some countries in Europe and China for manufacture of Air Springs.

FSL is thus well poised to encash the exponential boom in the Locomotive & Automotive Ancillary industry. The recent expansion and future capex will give a substantial fillip to its topline and bottomline in coming quarters. For the nine months ending 31st December 2006, its sales increased by whopping 60% to Rs.17 cr. whereas net profit jumped 140% to Rs.0.95 cr. with the massive expansion and modernization plans approved in the recent railway budget, FSL is expected to get some big orders in the near future. For FY07, it may report net sales of Rs.25 cr. with net profit of Rs.1.40 cr., which can shoot up to Rs.35 cr. and Rs.2.25 cr. for FY08. This works out to an EPS of Rs.4 and Rs.6 respectively. Investors are strongly recommended to buy the FSL scrip at current levels as its share price can easily double in 12-15 months.