Sunita Tools Ltd Q2FY26 – When CNC Meets Defence Dreams and Artillery Shells Start Flying

1. At a Glance

Welcome to the tale ofSunita Tools Ltd (BSE: 544001)— the Palghar-based mould base maestro that’s suddenly moonlighting as a defence contractor. The company that once polished steel plates is now polishing its artillery ambitions. With amarket cap of ₹540 crore,stock price of ₹860, and aP/E ratio of 114, Sunita Tools is the classic smallcap thriller — engineering sweat, ambition, and a sprinkle of Bollywood drama.

The Q2FY26 numbers were, let’s say, not exactly “Dhoom 3” level of performance —Revenue ₹15.26 crore (flat QoQ),PAT ₹3.04 crore (down 10.8%), andOPM 28.1%, which is decent considering the industry slowdown. The company maintains anROCE of 16.7%andROE of 13.3%, respectable for a business where machines work harder than HR.

And while the rest of the world is worrying about slowing demand, STL is renting a second factory inFaridabad to produce artillery shells, acquiring companies left and right, and planning to raise capital like there’s a war coming (spoiler: they might be the ones making the shells for it).

2. Introduction

Once upon a time, in the peaceful lanes of Palghar, Sunita Tools quietly built mould bases for industries like automotive, pharma, and consumer goods. Fast forward to FY25–26, and suddenly they’re buildingdefence-grade artillery shellsandaerospace components. That’s not diversification — that’s reincarnation.

The company’s evolution from a precision engineering firm into a defence powerhouse is both ambitious and hilarious in equal measure. One day they’re making moulds for bottle caps, the next they’re talking aboutfighter jet cockpit frames. Either someone in strategy watched too much“Uri: The Surgical Strike”, or the Pandey family just decided to join the Make in India defence race with full throttle.

Over the past year, STL has made some pretty serious moves:

• Acquiring 51% in Avisan Group(FY25 combined sales ₹6.27 crore, orderbook ₹20.53 crore).
• Investing ₹126 croreto triple itsartillery shell capacity.
• Tying up with Hyprix Aviationforfuse technology(because of course, what’s a shell without a fuse?).
• Receiving a ₹200–300 crore LOIfrom a NATO country for 100,000 shells — deliveries to begin Q3FY26.

If there was ever an SME stock that turned from boring to ballistic, it’s Sunita Tools.

3. Business Model – WTF Do They Even Do?

At its core, STL is a manufacturing and machining business. They specialize inmould bases, die sets, and CNC machined components. Their precision machining facility inPalgharoperates both CNC and conventional machines with sizes ranging from500×800 mm to 4000×2000 mm— basically, they can cut, grind, and polish anything from a pen cap mould to a missile launcher frame.

Their products are divided into three verticals:

1. Mould Base Division:
   • Custom and standard mould bases for plastics, die casting, and caps & closures.
   • Serves clients likeHero, Mahindra, LG, and TVS— the who’s who of Indian manufacturing.
2. CNC Machining Division:
   • Handlesprecision machining, pocket machining, and finishing workfor industrial clients.
3. Aerospace & Defence Division:
   • Operated through subsidiariesSunita Leoquip Aerospace Pvt LtdandSunita Imperial Aerospace Pvt Ltd, both focused on high-precision parts foraircrafts, missiles, and defence pumps.

Oh, and now they’re also planning aFaridabad artillery plant, because why not?

In short, STL is doing the heavy lifting for India’s industrial backbone while sneaking into the elite club of defence manufacturers.

4. Financials Overview

Despite the YoY drop, STL managed a decent rebound QoQ.But let’s be honest —a P/E of 114for a ₹15 crore quarterly revenue company is basically saying: “We don’t care about profits, we believe in vibes.”

5. Valuation Discussion – The Fair Value Range

Let’s attempt to