A prominent name in the mould base industry and now a major defence product manufacturer, Sunita Tools Limited stands out as a company to watch.
With over three decades of expertise in engineering and mould-based production, this company has built a strong reputation for precision and quality. Incorporated in January 1988, Sunita Tools specialises in manufacturing, machining, and grinding engineering goods, steel plates, and producing mould bases and die sets. In this article, we’ll take a closer look at the company’s financial performance, management guidance, SWOT analysis, product portfolio, and other key aspects.
With a market cap of Rs. 465 crores, shares of Sunita Tools Limited hit a 5 percent upper circuit at Rs. 759.35 on Thursday, as against its previous closing of Rs. 723.2 on BSE.
Management Guidance
The management has provided detailed guidance for FY26, FY27, and FY28, outlining expectations for the number of empty artillery shells, average price per piece (USD), EBITDA margin, PAT margin, and Debt-to-Equity (D/E) ratio under both worst-case and best-case scenarios.
For FY26, the worst-case scenario anticipates producing 22,500 pieces, while the best-case scenario expects 30,000 pieces. The average price per piece is $250 per piece. EBITDA margins are projected between 28-30 percent in the worst case, and between 30-34 percent in the best case. PAT margin ranges from 16-17 percent for the worst case, and 17-18 percent for the best case. The Debt-to-Equity ratio is 0.2 in both cases.
For FY27, the number of pieces is expected to be 1,30,000, with an average price per piece of $275. EBITDA margin is forecasted at 30-34 percent, while PAT margin of 18-20 percent, and the Debt-to-Equity ratio of 0.5.
For FY28, projections include 2,10,000 pieces at an average price per piece of $300 each, maintaining an EBITDA margin of 30-34 percent, PAT margin at 18-20 percent, and the Debt-to-Equity ratio at 0.2.
The company is focusing on producing complete explosives-filled shells in collaboration with specialised explosives filling partners. Additionally, developments in PGK (Precision Guidance Kit) and CCF (Course Correcting Fuze) technology will transform conventional shells into ‘smart’ munitions, greatly enhancing their operational value.
The company is also investing in the development of advanced 155mm shells offering extended range, superior accuracy, and versatile payload options such as smoke and illumination.
Company Overview
Sunita Tools Limited, a leader in the engineering and mould base industry, specialises in manufacturing ground plates, mould bases, and precision CNC-machined components. Its products serve as critical components across diverse sectors, including automotive, pharmaceuticals, electronics, consumer goods, aerospace, and defence, with rigorous quality testing ensuring compliance with industry standards.
As part of a strategic initiative to strengthen and diversify its footprint in the Indian engineering, aerospace, and defence sectors, Sunita Tools Limited has launched its Defence and Aerospace Vertical, focusing on the manufacture of empty artillery shells. This step marks the beginning of a broader journey, with future plans to expand into the production of filled shells, further enhancing the company’s capabilities and market presence.
The company has made a strategic entry into the defence sector through its upcoming Faridabad facility, designed to manufacture empty artillery shells of 155mm M107 design and other calibres, including 120mm. The first manufacturing line is near commencement, with plant and machinery already in place. This marks the launch of Sunita Tools’ Defence and Aerospace Vertical, with plans to expand into filled shells production.
Sunita Tools Limited currently operates from its established facilities in Ahmedabad and Palghar for engineering and tooling, with its upcoming defence manufacturing unit in Faridabad.
SWOT Analysis
Strengths: Sunita Tools Limited benefits from a strategic location that enhances its operational efficiency and supply chain capabilities. Its products are designed for compatibility with NATO and Indian defence systems, providing a significant competitive advantage. The company has secured a Letter of Intent (LOI) ensuring production capacity through FY28, supported by advance payments of 30 percent.
Weaknesses: The defence manufacturing sector is highly regulated, with stringent compliance requirements that can slow operations. Export restrictions pose additional challenges, and the business remains capital expenditure-intensive, requiring significant upfront investment for capacity expansion and technology development.
Opportunities: There is substantial potential for margin improvement through contracts for filled shells and explosives. Expanding exports to friendly nations presents a lucrative avenue, while India’s ongoing defence modernisation programme offers strong long-term growth prospects.
Threats: The company faces potential technology and design bottlenecks that could affect timelines and performance. Supply chain disruptions pose operational risks, and the sector inherently involves safety and legal challenges that require careful management.
Financial Highlights
In H2 FY25, Sunita Tools reported a consolidated revenue from operations of Rs. 14.3 crores, a marginal decline of around 6 percent HoH and 18 percent YoY. Similarly, the company’s net profit for the quarter stood at Rs. 2 crores, representing a decrease of nearly 50 percent HoH and 47 percent YoY.
In terms of financial ratios, Sunita Tools has reported a RoE of 13.4 percent and ROCE of 16.6 percent. Further, the stock is currently trading at a P/E of 95.1, compared to the industry average of 36.6.
Written by Shivani Singh
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