Frontier Springs Q2 margin reaches 29.8% as profit rises 35.8%

Frontier Springs Limited reported a 29.81% earnings before interest, tax, depreciation and amortisation (EBITDA) margin in Q2FY27, while profit after tax (PAT) rose 35.79% year on year to Rs 21.33 crore. Revenue from operations reached Rs 99.73 crore and cash and bank balances were Rs 32.73 crore at H1FY27.

How did Frontier Springs' Q2FY27 earnings change?

Frontier Springs lifted quarterly revenue, EBITDA and PAT in Q2FY27 against both Q1FY27 and Q2FY26. Revenue from operations was Rs 99.73 crore, up 27.11% sequentially from Rs 78.46 crore and 20.54% year on year from Rs 82.74 crore. EBITDA increased 54.55% from Q1FY27 and 34.69% from Q2FY26 to Rs 29.73 crore, while PAT rose 77.57% sequentially and 35.79% year on year to Rs 21.33 crore.

Frontier Springs' EBITDA margin expanded by 529 basis points, or 5.29 percentage points, from 24.52% in Q1FY27 and by 313 basis points from 26.68% in Q2FY26. Total operating expenses rose 18.19% sequentially to Rs 70 crore, below the 27.07% sequential increase in total income to Rs 99.85 crore. Finance cost was Rs 4 lakh, versus Rs 6 lakh in each of Q1FY27 and Q2FY26, while depreciation and amortisation was Rs 1.30 crore.

What drove Frontier Springs' Q2FY27 revenue and margin?

Management said part of Q2FY27 growth resulted from executing orders that could not be completed in Q1FY27 because raw-material availability was constrained by the geopolitical situation. The delayed execution coincided with revenue increasing by Rs 21.27 crore quarter on quarter, from Rs 78.46 crore to Rs 99.73 crore, and EBITDA increasing by Rs 10.49 crore to Rs 29.73 crore.

Management said demand remains strong across Frontier Springs' verticals and described its order position as robust. In coil springs, tenders for 4,000 wagons have been finalised, which management said will drive the next stage of segment growth. The air springs operation is running at around 250 coach sets a month, while the forging division's quarterly growth was driven entirely by railway business.

Frontier Springs has also taken job work from automotive companies to raise forging-capacity utilisation. Management said automotive job-work margins are slightly lower, but higher volumes are expected to improve utilisation and reduce operating cost at the forging capacity. It identified higher steel, oil and gas prices as a potential source of margin pressure in coming quarters and said current input costs are being included in tender bids to protect profitability.

How did Frontier Springs' first-half performance compare?

Frontier Springs' H1FY27 revenue from operations rose to Rs 178.19 crore from Rs 158.08 crore in H1FY26, an increase of Rs 20.11 crore. EBITDA increased by Rs 6.47 crore to Rs 48.97 crore, and PAT increased by Rs 2.89 crore to Rs 33.34 crore. The H1FY27 EBITDA margin was 27.48%, compared with 26.88% in H1FY26.

The first-half margin expansion of 60 basis points was smaller than the 313-basis-point year-on-year expansion in Q2FY27, alongside the lower Q1FY27 margin of 24.52%. H1FY27 EBITDA of Rs 48.97 crore represented 27.48% of first-half revenue, while Q2FY27 alone delivered Rs 29.73 crore of EBITDA at a 29.81% margin. Q2FY27 therefore accounted for more than half of reported first-half EBITDA.

Frontier Springs' FY26 results provide a longer-period comparison. FY26 revenue from operations was Rs 322.06 crore, up 39.22% from Rs 231.34 crore in FY25, while EBITDA rose 73.80% to Rs 86.31 crore. The FY26 EBITDA margin was 26.80%, up from 21.47% in FY25, and PAT rose 76.88% to Rs 61.31 crore.

What changed in Frontier Springs' balance sheet and cash flow?

Frontier Springs reported cash and bank balances of Rs 32.73 crore at H1FY27, compared with Rs 3.50 crore at FY26. Cash flow from operating activities was Rs 63.48 crore in H1FY27, against Rs 31.41 crore for FY26. Investing cash outflow was Rs 28.69 crore and financing cash outflow was Rs 5.56 crore, producing reported net cash flow of Rs 29.22 crore for H1FY27.

Trade receivables fell to Rs 42.97 crore at H1FY27 from Rs 60.89 crore at FY26, a reduction of Rs 17.92 crore. Inventories rose from Rs 34.13 crore to Rs 37.96 crore over the same comparison. Current assets increased to Rs 116.27 crore from Rs 101.97 crore, while non-current assets increased to Rs 143.08 crore from Rs 116.34 crore.

Borrowings declined in both reported categories. Long-term borrowings were Rs 1.35 crore at H1FY27 versus Rs 1.60 crore at FY26, while short-term borrowings declined to Rs 4 crore from Rs 9.20 crore. Shareholders' funds increased to Rs 218.67 crore from Rs 183.48 crore, and total equity and liabilities rose to Rs 259.35 crore from Rs 218.30 crore.

What is Frontier Springs management planning next?

Management expects Frontier Springs to maintain its current run-rate and now expects FY27 gross revenue of at least Rs 450 crore, while continuing to work towards stated guidance of Rs 500 crore. The revised expectation follows Q1FY27 supply constraints, while H1FY27 revenue of Rs 178.19 crore is the reported first-half starting point for that plan.

The FIBA system has received approval from the Research Designs and Standards Organisation, according to management. Management expects a trial order shortly; the trial is expected to run for six to eight months, after which it expects commercial production to begin. This timetable remains an expectation rather than a reported commercial-sales contribution.

Conclusion

Frontier Springs combined a Q2FY27 revenue increase of 20.54% year on year with a 313-basis-point EBITDA-margin expansion and a 35.79% increase in PAT. The Rs 32.73 crore cash balance, Rs 63.48 crore operating cash flow and reduction in trade receivables to Rs 42.97 crore were accompanied by lower short-term borrowings of Rs 4 crore.

The next points to watch are management's execution against its FY27 gross-revenue expectation of at least Rs 450 crore and its Rs 500 crore stated guidance, as well as the FIBA trial order and its six-to-eight-month trial. Management has also flagged higher steel, oil and gas prices as a potential pressure on margins, despite including current input costs in tender bids.